Law Degree Holders: Auto Insurance Premiums Increase?

Many factors influence auto insurance premiums, and it's not uncommon for people to wonder whether their educational background, such as having a law degree, can impact their rates. While it's true that insurance companies take various factors into account when calculating premiums, the presence or absence of a law degree is not one of them. Instead, factors like driving records, accident history, and geographical location play a more significant role in determining insurance rates.

No-fault accidents

In the context of auto insurance, a no-fault accident means that you weren't the party responsible for causing the collision. In most states, when an accident occurs, one party is usually considered "at-fault" and must cover the injuries of the other driver and their passengers, typically through their liability insurance coverage.

There are 12 no-fault states in the US: Florida, Massachusetts, New York, New Jersey, Pennsylvania, Kentucky, Kansas, Michigan, Minnesota, North Dakota, Utah, and Hawaii. In these states, drivers must carry personal injury protection (PIP) insurance, which pays for medical expenses after a car accident, regardless of who was at fault. This saves time and energy as drivers don't need to file a claim through the other driver's insurance. However, the downside of PIP is its cost, with most states that require it having premium rates above the national average.

In a no-fault accident, the at-fault party's insurance provider is generally responsible for the other driver's medical expenses and vehicle repairs. As a result, a no-fault accident typically won't cause your car insurance rates to rise. However, there are some situations where your insurer may still raise your premiums after a no-fault accident. For example, if the at-fault driver is uninsured, your insurance company may have to pay for your injuries and vehicle damage through your uninsured motorist coverage, and may then pass this extra cost on to you. Similarly, if the at-fault driver flees the scene, your insurance company may increase your premiums if you file a non-fault claim.

Educational level

The educational level of a motorist can have a significant impact on their auto insurance premiums. In general, people with a bachelor's degree tend to pay less for car insurance than those with only a high school diploma. This discrepancy in insurance costs is not merely a matter of a few hundred dollars but can amount to thousands of dollars in savings for those with a college education.

According to data, the national average auto insurance premium for drivers with a bachelor's degree is $2,168 per year, which is $478 cheaper than the overall national average for all drivers. However, the difference in cost becomes even more pronounced when comparing drivers with a bachelor's degree to those with only a high school diploma. The national average premium for motorists with a high school education is $5,988, a staggering $3,820 more than their degree-holding counterparts.

There are several possible explanations for this disparity. Firstly, younger drivers, who are more likely to be in the process of obtaining a degree or yet to start their college education, are generally more expensive to insure due to their lack of driving experience and higher chances of accidents. Additionally, insurers have found that individuals with only high school diplomas tend to present a higher overall risk of collisions, and insurance pricing is based on the likelihood of crashes occurring.

While it may seem unfair to those without degrees that they face higher auto insurance rates, it is essential to understand that insurers consider various factors when setting prices, including age, driving record, and other demographic characteristics. Nevertheless, regardless of educational background, all drivers can take proactive steps to minimise their insurance costs. These include shopping around for insurance quotes annually, choosing vehicles with good safety features and anti-theft devices, and maintaining a clean driving record by avoiding moving violations and accidents.

Comprehensive claims

While having a law degree may not directly impact your auto insurance premium, filing claims certainly will. Comprehensive insurance coverage is an optional coverage that protects your vehicle from damage caused by events other than collisions. These events are typically outside of your control and may include theft, vandalism, glass and windshield damage, fire, accidents with animals, or weather-related incidents.

Comprehensive insurance is particularly useful if you live in an area prone to weather-related disasters, high car theft rates, or frequent collisions with animals. For example, if you live in an area with a high risk of flooding, comprehensive insurance can provide peace of mind by covering flood damage to your vehicle. Similarly, if you frequently drive on roads with a high volume of deer or other animals, comprehensive insurance can help cover the costs of repairs in the event of a collision.

It's important to note that comprehensive insurance does not cover collisions with objects such as trees or buildings. For that, you would need collision insurance. However, comprehensive insurance can cover damage caused by falling trees or branches, differentiating it from collision coverage.

When deciding whether to add comprehensive coverage to your policy, consider the value of your car, your personal savings, and the likelihood of experiencing a covered event. If your vehicle has a high cash value and you cannot afford to repair or replace it out of pocket, comprehensive coverage is a smart investment. Additionally, if you lease or finance your vehicle, lenders will often require you to carry comprehensive insurance to protect their investment.

Comprehensive insurance can provide valuable protection against unforeseen events. By understanding what is covered and assessing your personal circumstances, you can make an informed decision about whether to include this optional coverage in your auto insurance policy.

Accident forgiveness

GEICO Accident Forgiveness, for example, can be earned or purchased in states where it is available. With Accident Forgiveness on your GEICO auto insurance policy, your insurance rate won't go up as a result of your first at-fault accident. GEICO Accident Forgiveness is per policy, not per driver. If you have multiple drivers on your policy, any of the eligible drivers may use this benefit once.

Progressive also offers accident forgiveness benefits as part of your auto policy for certain accidents in most states. Progressive offers three types of accident forgiveness: Small Accident Forgiveness, Large Accident Forgiveness, and Progressive Accident Forgiveness. Small Accident Forgiveness is automatically included for new customers in most states, and your insurance rate stays the same for your first claim that's less than or equal to $500. Large Accident Forgiveness is available to customers in most states who have stayed with Progressive for at least five years and have remained accident and violation-free for up to five consecutive years. With Large Accident Forgiveness, your rates won't increase even if the total claim exceeds $500. You can also purchase additional Accident Forgiveness benefits when you buy or renew your auto policy with Progressive.

In Florida, an insurance company cannot increase your premium unless they can show good-faith evidence that you were substantially at fault for the accident. If your insurance company wrongfully raises your insurance premiums, you have the right to file a formal complaint with the Florida Office of Insurance Regulation (FLOIR) and request proof that the accident was your fault.

Driving record

A person's driving record is a key factor in determining their auto insurance premium. The more driving risk a person has demonstrated in the past, the more they will have to pay for their auto insurance premiums. This means that an individual with a history of serious traffic violations or multiple accidents will likely pay a higher premium than someone with a clean record.

Different insurance companies have different rules about what constitutes an unacceptable driving record. If a driver's history shows a pattern of serious traffic violations or a high number of accidents, their insurance company may decide not to renew their policy. For example, a drunk driving incident is likely to trigger a non-renewal from almost every insurance company.

When it comes to evaluating a person's driving record for insurance purposes, practices vary from company to company. In general, when a driver makes a claim against their insurance policy due to an incident that is primarily their fault, the insurer will increase their premium by a certain percentage. These increases typically remain in effect for three years following the claim.

It is important to note that not reporting an accident can also impact a person's insurance premium. If someone involved in the accident decides to sue at a later date, the insurance company may have difficulty gathering evidence to defend their client. Additionally, failing to report an accident promptly could put the driver's insurance coverage at risk, as the company may refuse to honour the policy.

Frequently asked questions