Your Profession Influences The Auto Insurance Premiums

In order to assess the premium variance for 2 test subjects, a team of the NBC 6 Investigators got online car insurance  quotes for two men of the same age,  with the same address, car make and model, driving record, claim history and other factors the insurers required and selected the same levels of coverage for both men.  The only difference was the job: one was a surgeon, the other was a janitor. Find out more about how their job influenced the results and get a car insurance quote.

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GEICO’s online application displayed a six-month premium of $623 for the surgeon. But, with all other factors being equal, the janitor got a quote of $851 – 37 percent higher. The same thing happened for Progressive Insurance: $1,071 for the surgeon; $1,317 for the janitor – 23 percent higher.

To find out why, the investigators were referred by GEICO to the industry trade group, the Insurance Information Institute and Tallahassee-based consultant Lynne McChristian.

Lynne McChristian said rates must be set for “an actuarial reason” – meaning based on what expected losses will be for a given insurance potential customer. But if you think companies ask janitors to pay more because they have more crashes, on average, than surgeons, then you should think twice. A 2004 study by an insurance services company found medical doctors were 14 percent more likely to crash than manual laborers.

The thing is that insurance companies charge laborers more because premiums are not based on who crashes more – they are based on who is more likely to file a claim after a crash and cause the company money.

If doctors are “in a minor accident and have the lower deductible, they are more likely to pay out of pocket than use their insurance,” compared to laborer working paycheck to paycheck, McChristian said. “Oftentimes the doctor will cover their own deductibles,” McCarty said. “So while they may have more frequent accidents…the company actually pays out less.”

Allstate is one of the companies that do not consider occupation in setting rates, said Larry Dudkiewicz, head of an Allstate office in Aventura.

“With the assumption all the criteria is the same, the pricing would be exactly the same,” he said, adding, one applicant being a custodian and one being a surgeon “would not matter.”

State Farm, like Allstate does not use occupation in its premium calculation.

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