Affordable Auto Insurance Out of Reach for Drivers with Lower Education and Job Status

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A new study has revealed that drivers who lack college degrees or work in “lower status” jobs tend to suffer a higher cost of car insurance than their counterparts with more education and better careers. The Consumer Federation of America (CFA) released a study this week to showcase discrimination in the insurance industry, while fighting for affordable auto insurance for all drivers.

Cost of Car Insurance Higher for Blue-Collar Workers

The Consumer Federation of America released a study this week revealing the insurance companies that use factors like education and occupation to determine auto insurance rates.

To conduct its study, the CFA created two identical fake customers (a 30-year old woman with a perfect driving record) and requested quotes from the 10 largest auto insurance companies. Both individuals had the same driving records and lived in the same areas, but had different education levels and careers.

The association found when requesting quotes from GEICO, Progressive, Liberty Mutual and Farmers Insurance Group, the fake customer without a college degree and with lower-level employment was charged a higher auto insurance premium:

  • GEICO: A factory worker with a high school degree pays more than a plant supervisor with a college degree (in Seattle, $870 versus $599).
  • Progressive: A factory worker with a high school degree pays more than a plant supervisor with a college degree (in Baltimore, $1,818 versus $1,362).
  • Liberty Mutual: High school graduates face higher quotes than college grads.
  • Farmers Insurance Group: Anyone who is not a professional or certain type of government worker pays 5-percent more on premiums.

The CFA found that the other six insurers did not factor education or job status when calculating rates.

CFA Calls for Affordable Auto Insurance

Stephen Brobeck, executive director of the CFA, stated in a release that education and job type do not justify the use of those factors when determining auto coverage.

“Instead, they should use factors such as miles driven, the frequency and severity of accidents caused and moving violations,” he stated.

The CFA is urging states to play a role in prohibiting discrimination to help drivers who need it most acquire affordable auto insurance. He went on to explain that, because education and occupation are correlated with income and race, using these two particular coverage factors could amount to racial discrimination.

A Progressive spokesman responded to the study in an email, writing “We work to price each driver’s policy as accurately as possible using multiple rating factors, which sometimes include non-driving factors that have been proven to be predictive of a person’s likelihood of being involved in a crash.”

He added that consumers were invited to use the company’s Progressive Snapshot program, which offers drivers discounts based on their driving history, including the time of day they’re on the road and how far they drive.

Farmers and Liberty Mutual did not respond to requests for comment and GEICO forwarded all queries to the Insurance Information Institute.

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