Does Education Level Affect Car Insurance?

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Written by Eric Schad Edited by Nick Versaw

Updated May 8th, 2023

It’s no secret that insurance companies take a plethora of rating factors into consideration when determining car insurance rates. But did you know that they look at your education level as well?

The answer to the question of “Does education level affect car insurance?” is unequivocally yes, but diving a bit deeper can shed light on the why and how. Find out how your auto insurance rates change whether you have a high school diploma, a bachelor’s degree, or a graduate degree. Then learn how to lower your rates no matter what diploma you have.

How Does Education Level Affect Car Insurance?

The most common questions tied to education level are:

1. Why do car insurance companies care about the level of education I have?
2. How does that have anything to do with my premium?

A study performed in Maryland and New Jersey revealed the answer. Researchers wanted to know if a direct correlation existed between education level and claims risk. The study showed that more educated drivers tend to file fewer claims.

While more educated people may not necessarily be better drivers, research indicates those with a college degree or advanced degree tend to be low-risk behind the wheel. They are less likely to drive under the influence, disobey traffic laws, be involved in a car accident, or drive uninsured. This group is also more likely to own a home and have multiple vehicles, which allows them to qualify for additional bundling and car insurance discounts.

On the other hand, auto insurance companies deem less educated people as high-risk clients. The likelihood of unsafe driving behavior and more insurance claims equates to higher rates and insurance costs for these individuals. Again, this doesn’t necessarily mean that they’re worse drivers. It’s simply a result of the historical statistics that insurers have accumulated.

How Much Will You Save With Higher Education?

The numbers prove that the more education you get, the less you’ll pay for car insurance premiums. However, the difference isn’t as drastic as you might think. Here’s a look at the average monthly rates of car insurance by education level:

Does education level affect car insurance? Certainly. But the difference in auto insurance premiums between high school diplomas and a doctorate isn’t as much as you’d think. Still, saving 11% for full coverage and 26% for liability only is a nice chunk of change.

The variance between associate, bachelor’s, and master’s degrees is almost unnoticeable for liability-only insurance. For full coverage, a master’s degree can save you a bit more, but only around $168 annually compared to a bachelor’s.

Rates for High School Dropouts

If you dropped out of high school, you’re more likely to pay higher premiums. How much more is up to your insurance provider — there’s no concrete answer.

No high school diploma means limited job opportunities. This leads to less earning power and a higher likelihood of missing car insurance payments. It’s essentially a high-risk proposition for insurers.

The sensible thing to do not only for your car insurance rates but also for your future is to obtain a GED. This should help you find cheaper car insurance quotes, as well as more employment opportunities.

Rates for College Students

Working toward a degree can lower your car insurance rates, so that’s a step in the right direction. But while you’re in college, age is a far more crucial factor in what you pay than anything else.

According to data collected by Quadrant Information Services, you’ll pay an average of between $297 (liability) and $676 (full coverage) per month as an 18-year-old freshman. At 25, your rates will decrease drastically, falling to $109 for liability and $266 a month for full coverage.

If you’re between 18 and 24 and attending college, a good student discount is your ticket to cheaper car insurance. Allstate, Progressive, and State Farm all offer these types of discounts.

As long as you maintain a GPA of 3.0 or above, you can typically get these discounted rates. Ask your insurance agent how to qualify, and you can save around 10% on your car insurance premiums.

How Can I Lower My Insurance Rates?

If you can’t afford to head back to school just yet or you’re satisfied with your current career, you can still lower your insurance rates with a few tips:

• Hunt for discounts: Even though you won’t qualify for educational discounts, it doesn’t mean you can’t get others. One that might pertain directly to you is an alumni or professional membership discount. You can find plenty more, including paid-in-full discounts, military discounts, telematics discounts, and more. Ask your current insurer for a full list of offerings.
• Be patient: If you have a lackluster driving history, you’re probably paying more for your car insurance coverage. But don’t let that cause your patience to waver. Accidents and tickets usually fall off your insurance record within three to five years. If you maintain a clean driving record, cheap car insurance should follow.
• Drive less: If public transport is readily available where you live, consider taking the bus or train a few times a week to cut down on your yearly mileage. The less you drive, the less your chance of filing a claim, which translates to lower rates.
• Be a good driver: Improving your driving skills never hurts, and a defensive driving class could make you eligible for discounts. Some states will also eliminate points on your license if you take a defensive driving course, so doing some investigating is worth the effort.
• File fewer claims: If possible, try to limit the number of claims filed with your insurance company. The more claims you file, the higher your premium will be. If you can afford to pay out of pocket, it’s sometimes the better option.
• Modify your policy: Adjust your policy where possible. You can cut costs by raising your car insurance deductible, reducing coverage to liability only, or bundling your home and car insurance.
• Work on your credit score: Access to credit is beneficial for many consumers, but some have trouble keeping their spending in check. If you incurred credit card debt or defaulted on payments in the past, start paying it back. It will increase your credit score, another factor car insurance companies use to determine your rate.
• Compare car insurance companies: Don’t let a TV ad or marketing campaign tell you what car insurance company to use. With numerous regional and national insurance companies vying for your business, you have plenty of options to find the best rate possible.

Educate Yourself on the Importance of Car Insurance Quotes

Insurance companies will always use various factors to calculate your premium, but you can use the education level factor to your advantage. You can choose an insurance company that offers discounts for higher education or opt for one that puts less emphasis on your education level.

The best thing you can do is compare car insurance rates from multiple companies. Rates change over time, so if you’re diligent about shopping every six months to a year, you can find the best rates possible. It’s a valuable lesson learned and one that you can carry with you for the rest of your life. How’s that for education?

Methodology: All of the data referenced in this article has been gathered in collaboration with Quadrant Information Services. We analyzed more than 2.5 million rows of carrier-reported data to calculate the average rates referenced above. All rates are based on an insurance profile of a single-vehicle policy for a driver that owns a Honda Accord. For more information on how we calculate rates, please reference our data methodology.

Eric Schad Insurance Writer

Eric Schad has been an expert content writer for nearly a decade. Before getting behind the keyboard, he worked in the finance and music industries. With eight years of writing experience in the automotive and insurance industries, he enjoys communicating information that makes shopping for car insurance a breeze. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.