How do insurance companies incorporate education level when pricing policies?
Unless you live in one of a handful of states, education level contributes to your car insurance rates — but it's not a major factor. The difference in average auto insurance premium between a GED-earner and a PhD is just $27 per year. This gap has grown by $4 since 2016, but education level remains a minor rating factor. Let's explore the reason behind this price discrepancy and dive into some easy ways to save on car insurance with a GED.
In order to predict how much risk you pose, auto insurance companies rely on demographic and historical rating factors. Major factors — driving history and age — play a major role in dictating rates. Others — such as education level and gender — matter less. The below data shows average premiums by education level.
| Education Level | Average Annual Auto Insurance Premium |
|---|---|
| None | $1,460 |
| GED/High School Diploma | $1,443 |
| Bachelors | $1,427 |
| Masters | $1,416 |
| PhD | $1,416 |
Drivers with greater educational attainment — Masters and PhD level — pay the least for car insurance. Insurance companies see drivers with less education as more likely to take risks than a better-educated driver. The difference in insurance costs between a driver without a GED or high school diploma and a driver with a PhD is $44 per year.
The only exceptions are New York, California, Hawaii, Georgia, Montana, or Massachusetts. These states prohibit car insurance companies from incorporating education level as a rating factor.
USAA and Nationwide offer the cheapest insurance for drivers with a GED. The below data show rates from top companies for a GED-holder or high school graduate (view methodology).
| Insurance Company | Average Annual Premium |
|---|---|
| Allstate | $1,866 |
| Farmers | $1,488 |
| Geico | $1,374 |
| Liberty Mutual | $1,923 |
| Nationwide | $1,110 |
| Progressive | $1,685 |
| State Farm | $1,580 |
| USAA | $976 |
It's important to remember that car insurance is very specific, and your quote will depend on myriad factors. Use the above data as a starting point in your search for car insurance. The most popular insurance companies might not be the best option for you, so keep regional insurers in mind. Enter your zip code below to see rates from major insurance companies and local options alike.
While your education isn’t a major rating factor for your car insurance, saving money is always useful. Let’s break down some top ways to save on car insurance.
While these discounts won’t cut your premium in half, they’re simple and offered by most popular companies.
If you have an older vehicle, make sure you’re not paying for coverage you do not need. In general, if your vehicle is worth less than $4,000 and you own it, you do not need comprehensive or collision coverage. These coverages are designed to protect your vehicle but if your vehicle isn’t worth much to begin with, you might be paying for coverage you do not need.
| Coverage Level | Average Annual Premium |
|---|---|
| Liability Only | $672 |
| $500 Deductible | $1,427 |
| $1,000 Deductible | $1,268 |
You can determine the value of your vehicle through Kelley Blue Book and NADA online.
Most insurance experts advise you to only use your car insurance coverage sparingly and with caution. This is because of the way your premium will be impacted after you file an at-fault collision-type claim. Aka, your premium will increase. The majority of car insurance companies will keep an at-fault rate increase on your premium for 3 years. Meaning, you’ll be rated and charged for these claims for up to 3 years after the accident.
| Increase at 6 months | Increase at 12 months | Increase at 3 Years |
|---|---|---|
| +$291 | +$582 | +$1,746 |
As you can see, you’d be paying an additional +$1,700 for an at-fault accident. If you’re unsure if you should file a claim, considering our recommendations below:
Bear in mind, although you’re not obligated to file a claim, you still might have to report that you’ve been in an accident to your insurer. Check your insurance policy specifics to be sure.
Regardless of your education level, it’s always a good idea to shop around frequently for car insurance. While we were able to determine that Nationwide and USAA were the cheapest for our user profile, that doesn’t mean they will be for you. Shop around with as many companies as possible with your user profile to see how much you could be saving.
If you’re looking for more information regarding car insurance with a GED or car insurance in general, see our additional articles below.
Between September and December 2017, The Zebra conducted comprehensive auto insurance pricing analysis using its proprietary quote engine, comprising data from insurance rating platforms and public rate filings. The Zebra examined nearly 53 million rates to explore trends for specific auto insurance rating factors across all United States zip codes, averaged by state, including Washington, DC.
Analysis used a consistent base profile for the insured driver: a 30-year-old single male driving a 2013 Honda Accord EX with a good driving history and coverage limits of $50,000 bodily injury liability per person/$100,000 bodily injury liability per accident/$50,000 property damage liability per accident with a $500 deductible for comprehensive and collision. For coverage level data, optional coverage (that must be rejected in writing) is included where applicable, including uninsured motorist coverage and personal injury protection.
National property and casualty losses information is from the Insurance Information Institute and the NOAA National Centers for Environmental Information U.S. Billion-Dollar Weather and Climate Disasters report.
For vehicle make and model data, analysis referenced the most popular vehicles in the U.S. by 2016 year-end sales according to Goodcarbadcar.net’s automakers’ data.
Finally, some rate data may vary slightly throughout report based on rounding.
