How Does My Job Affect My Insurance Rates?
Last Updated on February 20, 2020
Steve from Anchorage, AK asks – “Does my occupation have any effect on the amount I will be paying for auto insurance?”
Some auto insurers consider your occupation and education when they’re determining your auto insurance rates.
Some insurance companies will ask you about your education level and current job to determine how much you should pay. Some studies suggest that lower-income workers could pay higher premiums for liability coverage.
Insurance companies have insisted that these practices help assess the driver’s risk of filing a claim. However, a lot of advocacy groups don’t like this practice because it unfairly targets disadvantaged people.
What we do know is that insurance companies charge more to entry-level workers with a lower level of education. A college-educated worker with a better job would pay less. The difference might be 20-45%. That might get you down, but different insurers have different premiums. GEICO might charge you a much lower premium than Progressive, for instance, for the same level of education and job. That should give you hope. There is not the same high premium across the board if you have a low level of education and a bad job. That’s why it’s crucial you always get car insurance quotes from several providers when you’re in the market for a new policy.
This data has riled many a social justice advocate, politician, and concerned consumer. Still, insurance companies insist this practice is necessary because it helps reflect the driver’s risk of making a claim.
The bottom line is that insurance premiums are based on the idea of calculated risk, and auto insurance companies use every relevant aspect of your life when they’re trying to determine what you should pay.
Lawyers, businessmen, and doctors might pay more than scientists, accountants, nurses, and teachers. It’s not all about class, education level, and salary. Some jobs are more stressful than others; some rob you of sleep more often. A pilot, for example, doesn’t have as much stress as a high-powered attorney. Some professions are very stable, and they tend to attract people with a very serious, detail-oriented personality type.
Why Do Car Insurance Companies Charge Higher Premiums For Lower Education and Entry-Level Jobs?
One of the main reasons – if not the only reason – these factors are used is because studies have shown a strong link to risk.
Companies are only legally allowed to use factors that are indicative of loss. Companies use a number of underwriting factors to help determine the price of a policy, and insurance regulators have approved all of them.
The bottom line is that insurance companies want to avoid not charging high enough for the risk. There are some jobs that tend to attract safer drivers. For instance, scientists pay very low car insurance rates. Engineers and professors have very low rates.
People that are very staid, reserved, and deliberative in their profession are likely to be the same when they’re driving. But, that is not how insurance companies make their decision. They don’t just guess. All of the risk factors are based on studies, hard data, and statistics. No one can – or should – really argue with hard data. Still, it is natural to feel an emotional twinge if you’re a low-income worker or someone with less education than someone who was born with a silver spoon in his mouth. What can you do, though? Your best bet is to maintain a clean driving record.
Certain customers are better than others, and insurance companies are looking at all legal ways to find the customer least likely to make a claim.
It’s not just the likelihood of getting into an accident. A doctor who makes a very high yearly salary is less likely to file a claim. He might just pay out-of-pocket.
There Are A Lot Of People Criticizing These Insurance Practices
Insurance companies fight to justify this practice; a lot of people don’t like it, though. Many people think they’re unfair. People with a lower income view these practices even more unfavorably.
The big reason people don’t like this practice is that they hurt the disadvantaged. People with less education and lower-paying jobs tend to pay higher insurance premiums.
In fact, several politicians have brought up the issue. Consumer groups have protested. Individuals have clamored for change. But, there is solid science and good decision-making behind using these factors in assessing the risk of a driver. They are probably not going to be as important as your driving record, though.
Car insurance companies use a variety of risk factors to help determine what your monthly premiums are going to be. Some of them may seem unfair, but every one of them is predictive of loss. Insurance companies have to make smart decisions. Risk factors are used with all providers and all types of insurance – car insurance is not unique. Ultimately, if you want cheap auto insurance, the best thing you can do is maintain a clean driving record.