Does My Education Affect My Car Insurance Rate?

Fran Majidi
April 3, 2019

While different insurance companies use different formulas in determining risk, most are pretty similar in breadth and scope. Most even use the same factors in calculating whether or not you will have a car accident. Because car insurance carriers need to sell more low-risk policies than higher-risk ones to stay afloat, risk management is a number one priority for insurance agents too.

There are many factors that are evaluated when you apply for car insurance. The following are commonly used factors in determining a fair rate: garaging address, driving record, what type of car you drive, age and education. Everything on this list seems pretty obvious, except for education, right? In fact, many people do not know that their degree (or lack thereof) helps set their auto insurance rate. Not only do good students get a discount on car insurance, but if you have a masters or PhD, you’re paying a bunch less too. If you’re wondering why, we have answers.

While the reasons behind the statistics are pretty unclear, data across the board shows that the more education people have the fewer the accidents they have too. No wonder then that some agents ask you how many degrees you have!

You may be one of many people who believe that it’s discriminatory to charge people more for not having a college degree. It’s even been compared with insurance’s ugly history of singling out African-American and Latino-American communities for higher auto insurance rates (this is now illegal). Some states have tried to ban the use of education levels as a factor in quoting, but they have not succeeded. So, we’re going to tell you how to beat the system.

What Can I Do if I Don’t Have a College Degree?

This is a very good question and thankfully an easy one to answer. The best thing you can do is ask your insurance agent if he/she works with a company that doesn’t use education level as a factor in determining auto insurance rates. Some do not do this at all. Keep calling around until you find an insurance agent that works with an insurer that doesn’t factor in education levels when giving you options.

If you do have a bachelor’s degree or a masters, the next time you renew your car insurance ask your insurance agent if your insurer takes your education into account when setting your rate. If your insurance agent says that they do not, find an insurance agent who works with a carrier that does calculate it.

In short, if it’s to your favor, use this factor to your advantage. If it works against you, make sure it’s not a factor in determining your risk. It may take a little more footwork, but if you’re working with a company like Smartfinancial, shopping for an insurance agent is easy.

Who Qualifies for a Good Driver Discount?

Whether you’re in high school or college, if you are a good student, you can benefit from a discount on your auto insurance because, again, students who excel in school tend to be lower risk drivers.

Keep in mind that young drivers (age 16 to 25) pay 80% more in car insurance. This makes every possible discount matter, especially a good student discount, which can cut 10 to 15% of your monthly premiums. Also, rate increases differ based on the state in which you live. The good news is that most insurance carriers offer discounts to students with GPAs of 3.0 or better. Standardized test can also be the source of nice discount. If you scored well on the SAT, ACT or PSAT, make sure to show your scores to your insurance agent. In addition to good grades and scores, a class ranking in the top 20% of your class is helpful.

Tips for College Students with a Car

Not only should you make sure to tell your insurance agent if you are a college student, but keeping your grades up will help too.

Do note also that you may be able to get a much cheaper rate if you stay on your parents’ policy. Even though adding you to their policy will raise your parents’ rate, it will cost less than if you get your own policy. If you are away for college, check to see if you’re covered by your parents’ insurer in the state where you attend school.

If you attend a school that is 100 miles or more away from home and you leave your car at your parents’ home, you may be eligible for a Distant College Student Discount.

Does Driving School Bring Down Car Insurance Rates?

Yes, most insurance carriers will lower your premiums if you have a driver’s education certificate or proof of enrollment in some type of driver training program. See if you can sign up for one for free through school. Even if you have to pay to take the class, it’s often worth the fees. Keep in mind, too, that some insurance companies, like State Farm have their own driver training programs. Always ask your agent if your insurer has driving courses that you can take. If not, ask if you’ll still get a discount if you find a school on your own.

Other Discounts that May Apply to Your Car Insurance

While there’s no guarantee that your insurer offers these specific discounts, they do exist. It never hurts to ask your agent about these:

  • Sorority/Fraternity Discount
  • Honors Society Discount
  • University and Alumni Discount
  • Military Discount
  • Safety Equipment Discount
  • Occupation/Association Discount
  • On-Time Payment Discounts
  • Mature Driver Discount
  • Bundling Discounts (bundle auto with home or with renters or commercial insurance)

Happy shopping, and we look forward to serving you with the best insurance agent. Just visit here!

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