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Does My Education Level Affect My Car Insurance Rate?

While it might sound strange, your level of education could have an impact on how much you are paying for your car insurance. As with any liability, insurance companies and agents want to minimize the risk that they take on. By getting to know the individual they are working with, they can make better judgments … Continued

While it might sound strange, your level of education could have an impact on how much you are paying for your car insurance. As with any liability, insurance companies and agents want to minimize the risk that they take on. By getting to know the individual they are working with, they can make better judgments about possible factors that play into how much risk an individual brings to the table. But exactly how does your education level affect your car insurance rate and what do you need to know in order to get the best deal? 

It’s estimated that across the board, about 60% of the auto insurance sector does vary their rates based on an individual’s education. While it’s a factor that’s taken into consideration, the price difference is actually not that drastic according to many insurers. Between individuals who have a GED and those with a Ph.D., the price difference can range anywhere between $4 and $30. 

Why Do Car Insurance Companies Care about Education Level? 

It all boils down to risk facts. Whether you are taking out a loan or shopping for insurance, companies look at a range of risk factors. Some of the major risk factors include your credit score, driving record, and claims. These risk factors are the driving (pun intended) indicators that determine whether you will be paying a high rate or lower rate. Regardless of where you shop for insurance, these will always be the main rates a provider looks at. 

There are minor factors that determine your rate as well. These minor factors can include your marital status, your gender, and of course your education level. Your education plays a role in your risk factor because insurance companies see individuals with lower education levels as riskier drivers. There is generally more “trust” associated with individuals who have pursued and obtained higher levels of education. 

Is It Legal For Insurance Companies to Factor in Education? 

Yes, in many states across the nation is it legal for car insurance companies to look at your education level. In California, Georgia, Hawaii, Massachusetts, Montana, and New York, however, the practice is illegal. Many other states are also pushing to end this practice because the notion that someone’s level of education should determine their trustworthiness is becoming outdated. Especially since higher education has skyrocketed in price, making it unaffordable for many. The latest data shows that the average cost of a bachelor’s degree is typical $40,000, a price tag many are not willing to pay. 

Critics also argue that individuals who are less educated often have lower paying jobs and that charging those who make less is a discriminatory practice. A policy advocate and insurance expert at Consumer Reports, Chuck Bell explains, “No one should have to pay a penny more for auto insurance just because they haven’t graduated from college or have a working-class job.” Bell goes on to highlight that many minorities and people of color have a greater lack of access to higher education. Because of this, minorities will typically be the ones to deal with higher car insurance rates. Bell and other critics of the education factor argue that insurance companies can’t discriminate based on race, but by considering the level of education, they are disproportionately penalizing those who are already marginalized. 

How Does Education Impact Your Car Insurance Rate?

Although the price difference in policies is rather minimal between those who have lower education and those with more education, the dollar amounts can add up over the course of someone’s lifetime. Through research compiled by Coverhoud, the education factor can cost some drivers thousands in dollars. Their research found the following, 

  • A driver who drops out of high school can expect to pay $713 more than someone who graduates. 
  • A driver with just a high school degree will pay $2,154 more than someone with a college degree.
  • A driver with a college degree will pay $2,164 more than someone with a doctorate degree.

While the numbers reflect what someone will pay over their lifetime and are not drastically high, there is evidence that depending on your education level, you may be paying a higher or lower rate. 

Get the Best Car Insurance Rate With Your Education Level

The good news is with all the different types of insurance coverage available, you can still find a pretty good rate regardless of your education level. The even better news is that roughly 40% of companies do not take into consideration your education level when determining your rate. Alright, you have a good chance of finding companies that will work with you and not factor in your education. 

One of the best places to secure an affordable car insurance rate is through online insurance exchanges. Websites like TheZebra.com and Insurify.com are some of the nation’s leading online car insurance comparison tools that help you secure a good rate. The different filters on these tools will also allow you to work within a budget that best works for you. 

In addition to shopping online, it can be a good idea to shop around your local town as well. Sometimes meeting an agent face to face will allow you to secure a good rate because you can plead your case. 

Wherever you shop, you should always seek to use discount codes or coupons to help you lower down your rate. Bundling your insurance with home and auto or multiple vehicles can help you secure a better rate and asking for discounts like military service rates and low mileage rates can also help. 

Conclusion

While it might seem unfair that your insurance coverage may change based on your education level, the good news is that this factor plays a small role in what your rate will be. As states continue to scrutinize this factor, it’s likely that legislation will continue to push forward in eliminating it the way several states already have. 

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