Should your education level, credit score affect your insurance rates?

Consumers don’t think it’s fair for auto insurers to consider education level, occupation, and lack of previous insurance in setting a driver’s premium, a survey from the Consumer Federation of America shows.  Most major insurers, it said, use such non-driving factors, which greatly increases premiums for low- and moderate-income drivers, often by more than 100 percent.

CFA executive director Stephen Brobeck  said, “…these factors have nothing to do with driving and discriminate against lower-income drivers.” He said,“Premiums should largely reflect factors such as accidents, speeding tickets, and miles driven, over which drivers have some control and which directly affect insurer costs.”

The survey polled 1,010 adult Americans in June.

All six factors rejected by consumers – gender, credit score, level of education, no previous insurance because the consumer did not own a car, occupation, and ZIP code of residence – do not relate to the consumer’s driving history and result in a wide variation in rates, the CFA said.

Only 31 percent of those surveyed said they favor the use of level of education to determine premiums, while just 33 percent favor factoring in a driver’s occupation in setting prices. By contrast, 87 percent support factoring in traffic accidents caused by the driver, and 85 percent favor considering moving violations.

12 comments Add your comment

Whirled Peas

September 25th, 2012
8:40 am

It is the insurance company’s business and they should be able to run it as they see best. If you don’t like your insurance company’s rules, take your business somewhere else. That is the way it works in a free market economy. Once you get the politicians involved, things will really get FUBAR.


September 25th, 2012
9:38 am

I know PLENTY of people who have never graced the door of a university who are MUCH more responsible than some of the “educated”. This is hogwash.


September 25th, 2012
9:51 am

Insurance is not a choice if you own a car. The states passed the laws that insurance is required. Becuase of that, government does have a responsibility to regulate the insurance business.


September 25th, 2012
10:35 am

Camille, technically you can self-insure. It requires putting up the money in the form of a bond in case you are responsible for injuries to someone else. If you don’t like insurance; self insure. Get the bond and be responsible financially for any repairs to your vehicle or injuries to your passengers. Then you can also hire a lawyer to help protect you in case of lawsuit.

Proud American

September 25th, 2012
2:19 pm

“It is the insurance company’s business and they should be able to run it as they see best.”

This attitude (typical conservative republican) is exactly why so many people are in such distress.
Hey Whirled peas: business has shown that it will gouge consumers more and more and more until there is no more blood to be squeezed. Business cannot self-regulate.

The conservative attitude is “you’re on your own, deal with it”. It’s a failure. Insurance industry regulation needs to be tighter, stricter and enforced with meaning.

First thing I would do: socialize health care and pass legislation BANNING insurance companies from selling health insurance. Let them sell auto, home and life. Period. Government provides free health care and sets payments for services, doctors and hospitals are required to participate or face stiff penalties. Americans consumers win.


September 25th, 2012
3:24 pm

Any time the Gov’t requires something, it creates an immediate demand for it where they may not be one. If auto insurance were not required, how many of us would carry it? Honestly?
I also feel that auto coverage creates a false comfort feeling for drivers. They take risks they shouldn’t because they feel that insurance is there to protect them if they screw up. I think you’d see people driving much more carefully – less speeding, waiting longer at stop signs, using turn signals more often, maintaining their vehicles better, etc, if there wasn’t this mentality of “oh, insurance will cover me”
That being said, obviously mistakes get made, which is why I feel insurance should be an option, not a requirement.


September 25th, 2012
5:55 pm

“Should your education level, credit score affect your insurance rates?”

Education level, no. You don’t need a college degree to be a responsible driver.

Credit score, yes if you’re a chronic deadbeat because not paying your debts can be an indicator of character and other issues. For others with short term bad credit, such as during periods of temporary unemployment, not so much a factor.

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September 26th, 2012
8:01 am

Hey Whirled Peas, you like most, I am assuming you are a conservative, are missing the nuanced position of this situation. THERE ARE NO TRULY FREE MARKETS IN ANY INDUSTRY IN THIS COUNTRY, LEAST OF ALL THE INSURANCE INDUSTRY! To correct you, politicians are already massively involved and have been so for a long time…wake up and stop drinking the left vs. right kool-aid. Since insurance is MANDATED by the government, which creates a false demand, which gives us practically no choice to become self-insured, and forces us to buy it from the few government enabled monopolies that offer it, they should not be able to set these arbitrary, vague, and discriminatory conditions that have ABSOLUTELY nothing to do with rating a person’s driving abilty or driving RISK. If you understood anything about driving RISK you would understand that there is absolutely no correlation between driving risk, level of education, and credit score. Besides, everyone is not meant to be college educated, and everyone is not a dead beat just because they do not have an 850 credit score.

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September 27th, 2012
7:17 am

Level of Education and Credit Score are meaningless in assessing RISK to the insurance companies. Just another way for the insurance companies to gouge the consumer.. I am not for government regulation, however when an industry proves it cannot regulate itself then the government needs to step in.. It’s not a right vs. left issue.


September 29th, 2012
4:21 pm

The zip code is used to determine if you live in a high theft area and also to determine the cost of repairing and / or replacing the vehicles involved in an accident. A car in NYC has a higher chance of being stolen or vandalized than a car in the middle of farm country. The same car in farm country will cost thousands less to repair or replace than in NYC.

In regards to education and credit score (not all insurers use this method) but the ones that do figure you have a higher chance of being a more responsible person with more on the line to lose if you have an accident. A more responsible person who has better credit is more likely to follow through on financial obligations regarding bill paying and accident deductibles. Someone with a troubled financial past and no solid career history is a higher risk that the insurance company will be stuck with missed bills or unpaid deductibles.