How does your job affect auto insurance?
Drivers with long commutes pay $7.09/mo more on average for auto insurance because they're in the car more. If you drive for work, you may need special business coverage.
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UPDATED: Apr 29, 2022
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- An auto insurance company can’t deny you the right to buy auto insurance based on your occupation, even if you work in a high-risk industry
- Insurance companies may offer discounts to some professionals who work in fields that would reduce their likelihood of having a loss when they are driving their personal car
- Vehicle usage will have a direct effect on your rates
- Driving people around for profit or driving a car with permanently installed commercial equipment will make you ineligible for personal car insurance as an applicant
- If you lose your job, be sure to change your vehicle usage and annual mileage rating to drive your rates down
A lot of different things affect your car insurance rates. Common rating factors include:
- Your driving record
- Where you live
- What you drive
While these are standard factors that are used when underwriting applications, many people don’t realize that what they do for a living can also affect their insurance rates.
Your occupation, your credit, and even how you drive your vehicle can impact your rates and lead to higher insurance bills.
If you’re interested in learning how your job can affect your insurance, here’s a guide to help:
How does a policyholder’s application affect the rates that the policyholder pays?
Insurance companies will ask you what you do for a living when you’re applying for coverage. They might even ask about the highest level of education that you’ve completed.
Both of the answers that you give can drive your premiums up or down. In fact, insurers have found that there is a direct correlation between education and claims.
Both your occupation and education are used together to determine how much you’ll pay.
Professionals in skilled positions and executives who have completed college tend to pay less for insurance than entry-level or blue-collar workers who have only a high school diploma.
The Consumer Federation of America has done an analysis to show that most major insurers charge their clients with less education and a lower status job higher rates.
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Which occupations carry less risk?
Insurance premiums are calculated by analyzing the risk class. In the industry, state officials in charge of regulating the insurance industry prohibit the use of factors that are discriminatory in nature and that have no relation to risk.
Some of those factors include the policyholders:
- National origin
While income can’t be considered when calculating your rates, the title that you hold can. What you do on a regular basis can affect how likely you are to be exposed to an accident and how likely you are to file a claim.
Some occupations carry less risk than others, such as:
- Police officers
These pay less than other professionals because they must pay attention to details and are less likely to get into an accident.
Doctors, athletes, and photographers are higher risk drivers who tend to pay higher rates because they work in more chaotic environments.
Some Professionals May Have to Buy Business Auto Insurance
If you’re driving your personal vehicle to conduct business, there’s a chance that you won’t qualify for a personal policy.
It’s important that you can distinguish between personal car insurance policies and business car insurance policies if you drive a vehicle with commercial equipment or if you drive your vehicle for business purposes.
In most cases, if you drive your personal car to job sites or to deliver consumer goods, you can buy personal car insurance. If your car is in your business name or your employees drive it around, you’ll need business insurance.
You also need a commercial policy if there’s any permanent commercial equipment installed in the car. Keep this in mind as you’re shopping around.
Your job can directly affect your premiums, but the indirect effect could be even worse. If you go from being unemployed to employed, you need to make changes to your policy so that your policy is rated right.
How you use your vehicle can have a dramatic effect on your rates because users can leave you more exposed to loss.
Individuals who work from home, are retired, or are unemployed will be rated as pleasure drivers. This is the lowest rated usage classification because you’re not driving during peak hours when there are traffic jams.
Commuters and business drivers pay higher rates because they go to and from offices during high-traffic times.
If you commute to and from work, how much your rates will go up depends on a few different factors. First, the insurance company will ask you how many days per week you work. Next, the company will ask you how many miles you drive to and from work daily.
These answers will be used to determine how many commuting miles you’re driving annually.
Does your annual mileage affect your rates?
Your commuting miles and your annual miles are two different numbers. If you have a long commute, especially if you live in one of the areas with the most expensive commutes, it could affect your chances of qualifying for mileage discounts. Insurance companies have their own mileage rating groups that carry different rates.
You can fall into average, high, or low mileage groups.
To be considered a low mileage driver you need to drive less than 5,000 miles per year.
Drivers who drive between 5,000 and 12,000 miles per year typically pay average rates. Drivers who exceed the average of 12,000 miles per year will pay a high mileage surcharge. Carpooling can keep your mileage down.
Employment can really affect your insurance rates. Some of the effects are more direct than others. You should always compare auto insurance rates whenever you’re trying to find a good deal.
A quick way to comparison shop is to use an online quote tool. Enter your personal information, be upfront about your occupation, and commute, and then you can find the best deal by reviewing instant insurance quotes.