Does Your Level of Education Impact Your Auto Insurance Rates?

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Rachel Bodine graduated from college with a BA in English. She works as an associate editor and writer for for over a year and enjoys creating content that offers expert advice on car insurance topics.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs...

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Reviewed byLeslie Kasperowicz
Former Farmers Insurance CSR

UPDATED: Mar 13, 2020

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Insurance companies use hundreds of different factors to calculate your car insurance rates. Your level of education may be one factor.

Does your level of education play a significant role in car insurance premiums? Does someone with a college degree pay less for car insurance than someone with a twelfth-grade education?

Today, we’re explaining everything you need to know about how your level of education affects car insurance premiums.

education level impact auto insurance rates

Your Level of Education Could Impact Auto Insurance Rates

Car insurance companies look at your driving record, the type of vehicle you drive, your ZIP code, and other information to calculate your car insurance premiums.

They also look at your level of education. Studies have shown that drivers with advanced degrees are less likely to make a claim than drivers without advanced degrees.

All other things being equal, a driver with a twelfth-grade education may pay more for car insurance than a driver with a bachelor’s degree, master’s degree, or Ph.D.

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Certain States Have Tried to Prevent Car Insurance Companies from Using your Education

Car insurance companies have faced plenty of criticism over the years for discriminatory practices.

In the 1960s, for example, car insurance companies in the United States were widely accused of “redlining,” which involved drawing “red lines” on a map around African-American and Latino-American communities, and then charging policyholders higher rates for living within these communities.

Some claim that charging policyholders different rates based on their education is similarly discriminatory. Is it really fair to charge someone more for car insurance because they received a degree?

Individual states have fought to ban this practice. New Jersey and Rhode Island, for example, recently took car insurance companies to court in an effort to prevent education from impacting car insurance premiums. These efforts have been mostly unsuccessful – and many car insurance companies across America continue to use your education to determine car insurance premiums.

How to Get Lower Rates on Car Insurance With or Without a Degree

Some car insurance companies use education to determine car insurance premiums. Others do not. We recommend using this system to your advantage with or without a degree.

If you have a degree, then find a car insurance company willing to offer a discount to policyholders with a higher education.

If you don’t have a degree, then find a car insurance company that does not give discounts to those with a higher education.

Compare car insurance quotes online today to find the best price on car insurance regardless of how much education you have.

How Much of a Discount Can I Receive With a Higher Education?

How much of a discount can you expect to receive with a higher education? The difference can be significant.

Most studies show drivers can save anywhere from $300 to $600 per year just by having some type of post-secondary education.

Savings vary based on your amount of education. A high school dropout, for example, will pay about $300 per year more for car insurance than someone with a twelfth-grade education.

Similarly, someone with a bachelor’s degree may pay around $300 per year less for car insurance than someone with a twelfth-grade education.

As you get more degrees, the savings start to decline. Someone with a Ph.D., for example, may only pay about $30 less for car insurance than someone with a master’s degree.

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Don’t Forget About Student and Alumni Discounts

Someone with a degree may pay less for car insurance than someone without a degree. However, other discounts may also be available to students and alumni.

Many car insurance companies offer good grade discounts to high school and college students under 25, for example. If you maintain a B+ average or higher across all your classes, then you may receive a 5% to 15% discount on car insurance. Studies show that good students tend to be good drivers, so car insurance companies are happy to reward this behavior.

Similarly, many car insurance companies offer discounts to students living away from home. You may be able to save a significant amount on car insurance if you live away from home for the school year, while still remaining covered if you want to drive a vehicle when you’re back home.

Finally, many alumni groups offer car insurance discounts to graduates. Insurance companies may partner with alumni groups to offer certain discounts, making it easy to save even more money on car insurance.

Or, if you used your advanced degree to get a specific profession, you could qualify for professional discounts. Doctors who graduated from medical school, for example, may be entitled to a significant car insurance discount. Similar discounts may also be available to nurses, professors, and other professions that require higher education.

Final Word

Your car insurance company uses hundreds of different factors to calculate car insurance premiums. Those factors include your driving history, ZIP code, and yes – your education level.

Despite criticism and legal complaints from states, many car insurance companies continue to give lower car insurance rates to policyholders with post-secondary education.

Compare quotes online today to ensure you pay the lowest rates for car insurance with or without a degree.

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