Education of motorists does affect the premiums they are charged for vehicle insurance. There are various studies that show the premiums can be lower for people with university degree or a respectable profession compared to high school graduates with low income jobs.
Changes in Factors Affecting Vehicle Insurance Rates
Lately companies use many auto insurance factors that area not related to driving on their premium calculations. These are mainly based on extensive studies on past claim and accident statistics. When they see a consistent relation between claims and certain input they may include it in their programs. Since the calculations are done by computers they can include much more data in their quote programs.
As the competition in the insurance market intensifies auto insurers have to judge the risk accurately. If they over price they lose the competitive edge and they lose money when they are too cheap. Adding some more variable into their equation allow them to be sharper in calculations. When they offer extra discounts to certain people it does not mean that the others will lose out. It just means that they cannot get the particular discounts if they do not make the cut.
Is It a Discrimination or Is It Even Legal?
Consumers are protected by state and federal laws against discrimination due to their age, color, sex and occupation and background. The last two relates to education directly. This means that companies cannot refuse to insure, renew or cancel a policy based on these details. Nonetheless, they are allowed to differentiate their rates using many factors like age, gender, education, occupation and credit history.
They have problems in some states for using various determinants. However, they are expected to justify their decisions to include these factors like education and profession. Their decision must be based on actuarial data and clear evidence must be shown.
Companies make their decisions based on the probability of suffering a loss due to claims. They cannot be choosy for other reasons. If highly educated people caused a lot more accidents they would have paid higher premiums.
Studies Supporting the Use of Education as Indicator
There are various studies on various non-driving related factors. For example Federal Trade Commission (FTC) studied the effects of credit-based insurance scores on possibility of claims and they found a strong relation. Therefore, use of credit scores is allowed in most states across the United States of America.
New Jersey Department of Insurance carried out a study on use of education and occupation in vehicle insurance premium calculations. This study concluded based on the detailed loss data provided by auto insurers that claim levels were different for different education levels and occupations. Therefore they would not have any objection to use of such information.
When someone is getting cheap auto insurance rates because they finished university it doesn’t mean that you will be penalized for it. Maybe you will get enough discounts for other reasons and affordable premium.
Motorists should keep in mind that there are many companies that either do not care much about education or do not place much importance on it when they give a quote. It is best to get several car insurance quotes to determine which company will offer you the best deals in current circumstances.