How The EU Raised Car Insurance Rates In 2012

carinsuranceDrivers in the UK were in for a rude awakening at the end of 2012. While the EU never really interfered with car insurance policies and rates in the past, all of a sudden, they took note of something that had been going on for years and which they felt was discriminatory and needed to be stopped. If you have not yet heard about the EU gender directive that will force car insurance companies to re-evaluate the rates they are charging to drivers across the UK, read on to learn more and to understand how these new changes will affect you and your budget for car insurance.

The History of UK Car Insurance

In the past, men (especially young men) in the UK typically paid a higher insurance premium than women did. Even if both genders were driving the exact same make and model of a vehicle, and each had the same driving record, men would have to pay more for the same level of car insurance coverage than their female counterparts. The reason for this was based on statistics.

Young men, in particular, seem to be the most reckless behind the wheel, leading to more accidents and injuries than those caused by female drivers. Young men are more prone to speeding, driving late at night, and making other poor decisions before they get behind the wheel and while they are on the open road. Because male drivers typically caused more accidents and fatalities, car insurance companies felt that men came with a higher risk and, therefore, these companies prepared themselves for medical costs and vehicle repair costs by charging more upfront for their insurance plans.

Women, on the other hand, used to be rewarded for their good driving behaviour. But now the rules have changed. Though the way the system worked seemed to make sense for a long time, the EU has stepped in and created a new law.

New Rules for Car Insurance Providers

Car insurance providers can no longer discriminate against male drivers by charging them a higher insurance rate, regardless of what the statistics on their driving behaviors reflect. The EU now wants all car insurance rates to be equal across the two genders. In other words, men and women will, from now on, pay the same amount for their car insurance. But instead of bringing all of the insurance rates down to meet what women were paying, the insurance rates will instead go up for women, who will end up paying what their male counterparts were paying.

The change in rates will mostly affect young women, as young drivers are penalised with higher rates because they are more likely to get into accidents than older, more experienced, and very careful drivers. As you can imagine, there are mixed feelings about this EU directive, but drivers in the UK will simply have to deal with the changes and get used to them over time, budgeting to afford the extra costs each year.

Jamie Dunning is a renowned author in all things insurance related. When checking out the latest in car insurance, Jamie often visits garethsquote.com.

Jimmy Simond is a founder of Personalfinancetricks.com, he share his immense knowledge of finance in this blog.