While no kid dreams of becoming a doctor or firefighter just to save on car insurance, that is a real perk that comes with some professions.
That’s because many insurance companies take your occupation into account when deciding your rates, even down to your specific job title.
How useful is that information? After all, no one’s going to change careers to shave a few bucks off their premiums.
Well, the next time you’re shopping for car insurance, try out a couple variations of your existing job title. The results might surprise you — and maybe even give you a little extra confidence in your choice of career.
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Why take your career into account?
Each insurance company has its own proprietary algorithm it uses to set premiums, and they each keep their formulas a closely guarded secret.
In the U.K., you can easily find tools online that show how your rate changes based on your job title — say, from news reporter to journalist or writer.
Michael DeLong, a research and advocacy associate at the Consumer Federation of America, says he isn’t aware of a similar tool stateside, but that doesn’t mean insurers aren’t looking at that information and adjusting their rates accordingly.
DeLong says your job and title can be relevant for insurance companies looking to determine how much you drive and at what time of day.
“Miles driven is the most accurate measure of how likely you are to get into an accident, so that makes a certain amount of sense,” he says. “But what we found is that someone’s job can actually impact their auto insurance premium, even in cases where it wouldn’t seem to automatically follow.”
Occupation and title can also go a long way in telling a company what the culture is like at your workplace and how that might affect your driving.
Some jobs carry a stereotype of social drinking or partying, says Emily Leff, research content lead at Insurify.
“Bartenders, for example, [are] more associated with social drinking, obviously,” she says. “And also, the hours … [those] kind of non-traditional hours, late at night, you could more likely get into accidents during times like that.”
Using your job is banned in some states
Insurance companies can take a lot of factors into consideration, from your gender to your zip code, and how each factor gets weighted varies.
“Different companies have their own unique formula when it comes to setting rates,” Leff says. “It also depends what state you’re in.”
For a long time, advocates have been arguing that your education and occupation shouldn’t have any bearing on your insurance rates.
Several states have even banned the practice, including California, Massachusetts, Hawaii, Georgia, New York and Michigan.
Nevertheless, a Consumer Reports study from 2021 shows that your occupation can have a significant impact on your rate, depending on the insurer.
With some providers, it found significant discrepancies between what lower earners and higher earners actually paid for their insurance over the year.
For example, Geico quoted applicants in typically lower-paying jobs an average of nearly $100 more a year than people who had jobs that pay higher wages.
Farmers Insurance also asks for your occupation when you’re filling out a quote, but it didn’t have much impact on the premium price, according to Consumer Reports.
“We think that basically, when your title changes in those ways, that auto insurers are trying to use it, to have sort of a rough proxy for wealth,” says DeLong.
The logic could be that customers with higher-paying jobs can afford to bundle insurance, taking on life or home or renters insurance, he says. So the company may be more apt to provide them with a lower rate when it comes to their car insurance, as a sort of incentive to buy more.
But it’s hard to say exactly what impact a specific job title has, says Leff, as there isn’t much publicly available data on it.
See for yourself
The best way to find out is to try it yourself.
MoneyWise did its own unscientific poll, checking quotes from several of the biggest auto insurance companies in the U.S.
Some, including All State, Liberty Mutual, Nationwide and Travelers Insurance, didn’t ask for an occupation for a preliminary quote. Farmers Insurance made it optional for discounts, and only certain occupations qualified.
But both Progressive and Geico required a job title be submitted for a quote.
Keeping all the personal, geographic and driving habits details the same, a driver in her 30s with a 2013 Volkswagen Jetta got varying rates when the only information that changed was her job title.
Progressive’s monthly quotes were:
And with the same titles, Geico’s six-month premiums were:
Keep in mind, these rates aren’t finalized. Preliminary online quotes can differ from the actual premium price, and an insurance company may gather more information from you before finalizing a rate.
Additionally, the Consumer Reports researchers acknowledge that there may be other factors “not visible to this study” that influence pricing. Multiple insurers they looked at had notes in their small print that their price quotes rely on “assumptions” made based on the information consumers provide.
Don’t push it too far
DeLong at the Consumer Federation of America advises that honesty is the best policy when it comes to insurance.
Not only can lying result in losing your insurance, using a title that doesn’t accurately describe what you do to get a better insurance rate can be considered fraud.
“You should be absolutely truthful when filling out the information for an insurance quote, because if you don’t, you can be held liable,” he says.
He adds it can help to emphasize that you are a cautious and careful person. But ultimately DeLong says the best way to get a good rate is to shop around.
“It’s well worth taking your time to spend an hour or two and look around for a better deal.”
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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