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New Data: Do Car Insurance Carriers Alter Rates Based on Education Levels?

CoverHound data has pulled back the curtain from many of car insurance’s great mysteries when it comes to arriving at rates. And now we’re ready to touch the third rail and answer the most provocative question of all.

So, once and for all, do carriers charge drivers with less formal education more for car insurance?

The answer is yes, but not in all the ways one might expect.

According to new data from our platform, high school dropouts pay the most for car insurance. Over the course of a driver’s lifetime a high school dropout will pay $712.80 more than a high school graduate, $2,154.00 more than a college graduate, and $2,164.80 more than someone with a doctorate.

Interestingly, 40% of carriers did not vary rates depending on education level. This could be for a number of reasons, but the hypothesis here is that those carriers simply did not believe in the causal link between education levels and predictors of risk or loss.

Looking only at carriers that do vary rates for education levels, drivers who do not finish high school pay, on average, $3,352.80 more for car insurance than the average college graduate over the course of a driver’s lifetime.

It was somewhat surprising to reveal that the biggest gap between groups is the gap between those whose formal education ends with a high school diploma and those who spent some time at college without graduating with a degree. Each member of the latter group pays $1,240.80 less over the course of his/her driving lifetime.

The data shows that, at the very least, staying in school will help you save on insurance. And while one can rationally understand why a carrier might charge a driver with less education more for car insurance, it does raise questions about fairness and profiling.

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