These little-known factors could be driving up the cost of your car insurance

Taking Action

RICHMOND, Va. (WRIC) — 8News has uncovered two things that could mean you pay more for car insurance — and it has nothing to do with your driving record.  

Chesterfield County resident Teresa Williams drives a few miles each day to her job and to run errands for her family. 

“I have a perfect driving record, never had a ticket before in my life,” says Williams.

Williams had no idea her waitressing job and high school diploma could have her paying significantly more for car insurance.

8News has uncovered two things that could mean you pay more for car insurance -- and it has nothing to do with your driving record.  

“I think it should be your driving record, your experience,” she said.​​​​​​​You often hear it in those commercials: big insurers touting big savings on your auto insurance. Yet, what they don’t tell you is, they can use your education and occupation to determine your premium.

8News found the higher the education, the better the job, the less you pay.

We got rate quotes for Williams. We entered the same age, address, car make and model and driving history.

First, we applied with Williams waitressing job and high school diploma. Geico quoted us more than $145.87 a month. Second, we gave Williams a college diploma and made her a doctor. Then, the rate dropped to $131.22 a month.

“That doesn’t even make sense,” Williams said.

“You know, somebody who has a professional degree can still have a bad driving record.”

8News also checked Progressive and Elephant auto insurance and found every time “Dr. Williams” got a better deal.

8News found Liberty Mutual won’t ask you about your job, but they do care about education. Once again we found, the college grad saves.

“Not fair at all,” Williams reiterated. “This is really shocking to me.”

Eric Poe, the Chief Operating Officer of Cure Auto Insurance, said, “it is basically discrimination against the lower-income or middle-income drivers in the country.”

Cure Auto Insurance is a non-profit competitor to the bigger insurance providers.

8News has uncovered two things that could mean you pay more for car insurance -- and it has nothing to do with your driving record.  

“Nobody knows you are going to pay 30 to 40 to 50 percent more simply because you don’t have a four-year college degree,” Poe explained.​​​​​​​Poe, who says Cure primarily bases its rates on driving record, is opposed to the use of education and occupation. He’s launched an ad campaign to put the brakes on it.

He’s also taking his fight to Washington. We caught up with him as he met with Congresswoman Bonnie Watson Coleman of New Jersey.  She is introducing the Paid Act, which would prohibit the use of a driver’s education and occupation in determining auto insurance rate calculations.

“These issues really are proxy for race and socioeconomic status the representative said. “What you pay should be predicated upon what you’re driving, where you’re driving, how you’re driving.”

When 8News asked the insurers about the rate quote difference, Elephant told us:

“Elephant is committed to offering fair pricing to all customers. Our premiums are based on over 50 different rating factors which help us assess the unique risks associated with individual drivers. These factors are based on our assessment of claims statistics, years of customer data, and they are approved by each state’s insurance regulators. This approach helps us to price accurately based on the probability of the consumer presenting a claim and allows us to offer affordable insurance to the maximum number of drivers.”

Liberty Mutual told 8News:

“Liberty Mutual Insurance looks at dozens of factors when determining a customer’s overall risk, any of which must be permitted by state regulation.  Auto insurance is one of the most competitive markets in the United States, with many companies for drivers to choose from when seeking to insure their cars.  We are committed to offering drivers in Virginia and all states with fair and competitively priced car insurance coverage options, backed by benefits, discounts and superior customer service.”

All of the insurers, including Geico and Progressive, referred 8News to industry trade associations to speak on their behalf.

Michael Barry with the Insurance Information Institute says education and occupation are factors that have been mathematically correlated to driver’s risk.

“Often times by asking about education and occupation, the auto insurers are able to get a better picture of a person,” Barry said.

Yet, Poe doesn’t buy it. A study back in 2004 found after student doctors and lawyers were among the worst drivers. Poe says it’s about profits.

“What my industry looks for is the most profitable risk bit the safest risk, because all they are looking for is profits,” Poe said.

Poe says wealthier, white-collar workers are less likely to file claims and more likely to pay for a fender bender out of pocket. He added that white-collar workers typically have more to insure, which means can add up to more business for insurers.

“Those people tend to have more assets, so they have a house or a boat,” Poe explained.

8News has uncovered two things that could mean you pay more for car insurance -- and it has nothing to do with your driving record.  

Lawmakers like Watson and Coleman, and drivers like Williams understand that insurance is a business, but they think this is a poor practice.​​​​​​​”We have an obligation to educate the public on this,” says Representative Watson Coleman. “I have been discriminated against my entire for doing the right thing, only because I didn’t get a college degree,” Williams said.

Not all insurers use education and occupation. For instance, 8News found State Farm and All State do not. Barry says drivers should shop around.

“I think the thing to keep in mind, Virginia has a very competitive market place,” says Barry. 

In the meantime, states have to approve what factors insurers can use and New York recently moved to ban the use of education and occupation in setting rates. Virginia’s Bureau of Insurance told 8News the Bureau looked into the issue years ago.

“At the time, the Bureau determined that education and occupation are legally permissible rating considerations provided the rates are based on relevant actuarial data.  There are laws in Virginia that allow insurers to use relevant actuarial data in setting rates and that prohibit an insurer from charging rates that are not based on actual or reasonably anticipated loss experience or that are not based on sound actuarial.” — Virginia Bureau of Insurance

8News will keep an eye on that federal bill, but in the meantime, here are some other ways for you to save on your car insurance no matter what you do for a living:

WATCH: Tips for saving on car insurance

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