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education and car insurance rates

Does Your Education Level Impact Your Car Insurance Rates?

    3 minute read

    It seems like almost every day, there’s at least one story in the news about education in America. One day it’s about underfunding of public schools, and the next it’s about overwhelming college debts. One week, experts stress the importance of a college degree in the job market … and the next week they bemoan how unprepared college graduates are for the workplace.

    Here’s another recent topic : people who are well educated often pay less for auto insurance.

    college graduates tend to pay less for auto insuranceIt’s true. A recent study conducted by the Consumer Federation of America found that some insurance companies charge anywhere from 12% to 45% less for auto coverage to customers with a college degree. In addition, drivers with graduate degrees or doctorates often pay less than their bachelor’s degree counterparts.

    Not surprisingly, there are some who are upset that better educated drivers get lower rates. The CFA’s executive director, Stephen Brobeck, claims that the higher rates for people in working class jobs place an additional strain on the finances, because jobs without a college degree tend to pay lower wages.

    So why exactly are auto insurers charging higher rates to less educated drivers? The answer is simple: because they tend to be riskier drivers. And statistics bear that out.

    Two states, Maryland and New Jersey, convened lawmakers to take a closer look at the practices of certain insurers — specifically, whether these firms were justified in differentiating premium amounts by education level. Both probes concluded that not only was this practice lawful, but also that the relationship between education and claims risk was actuarially sound. In plain English, this means that insurance companies had the numbers to back up the assertion that more-educated drivers tend to file fewer and less-costly auto insurance claims.Read More »Does Your Education Level Impact Your Car Insurance Rates?