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How your job affects your car insurance
Save money by choosing the right policy for your career.
What you do for a living can have you paying more for your policy. Choosing the right policy at the right price can help you make sure you’re not underinsured or paying the price for a risky career.
How does my job affect my car insurance?
Changing companies within the same industry and career should have no effect your rates, and income level isn’t a factor in car insurance rates. But there are two main factors that could affect car insurance when you switch jobs: driving distance, your industry and career level.
1. Driving distance
If you travel regularly, drive people in your car for work or transport stock or equipment, you could pay higher rates for car insurance. In some cases, you may need special insurance coverage, such as rideshare insurance for Uber and Lyft drivers.
2. Industry and job title
By law, insurance providers can’t consider your income when calculating rates. But they can use your industry or job title to determine the amount of risk you bring.
For example, doctors and DJs often work long hours, which can lead to an increased likelihood of accidents — and higher premiums. On the other hand, military personnel could qualify for exclusive discounts to lower the cost of insurance.
3. Career level
Insurance companies may also factor your job level into calculating rates. So if you’re promoted from a bank teller to an executive in the corporate office, you may pay less overall because your perceived level of risk goes down.
Car insurance and education
Careers tend to be linked to education, and those two factors together can have a major impact on insurance rates. And every insurer calculates it differently. In 2014, the nonprofit New York Public Interest Research Group (NYPIRG) found that a low-wage worker with a high school diploma could pay 19 to 41% more for the same policy than a college-educated professional, even if both people had the exact same driving history.
The study also found that a high-status career may matter even more than driving history. For example, Geico quoted a retail cashier with a high school diploma and a spotless driving record 24% more for insurance than a college graduate executive with two speeding tickets in the last several years.
While Geico, Progressive and Liberty Mutual rates depended on the education and career of the applicant, State Farm did not factor it into the equation — and as of May 2019, State Farm does not ask about your career when obtaining a quote.
How to choose the right coverage based on your job
Consider how much you drive and how at-risk you are of getting in an accident on the road.
|Coverage type||What it covers||Why you might need it||Who might need it|
|Liability||Covers hurting someone or damaging their property and legal costs if you’re sued||If you have a high net worth||Doctor, lawyer, salesperson|
|Collision||Covers repairs to your car after an accident with another vehicle||If you drive often||Contractor, vendor, courier|
|Comprehensive||Covers non-collision damage to your car, including animal collisions, potholes and windshield cracks||If you drive often or in high risk areas||Construction worker, farmer, contractor|
|Uninsured motorist||Covers repair costs if an at-fault driver can’t afford to pay||If you drive an expensive car||Doctor, lawyer, salesperson, manager|
|Personal injury protection||Covers medical costs for anyone involved in a car accident||If you drive with passengers||Realtor, teacher, caregiver, chauffeur, volunteer|
Do I need to tell my insurer if I change jobs?
No, not unless it’s a major career, industry or title change. You’re typically required to let your insurer know after a major job change. You might get a different car insurance rate depending on how big of a change it is.
Compare car insurance companies
How to update car insurance after changing jobs
Get in touch with your provider to update your account. Be sure to discuss your change in title, if any, as well as how your estimated annual mileage could be affected. Methods include:
- Online. Log into your account and edit your driver information.
- Phone. Call your insurance agent to discuss updates.
- Email. Send a note to your agent describing your job change and ask how it could affect rates.
You could also take this as an opportunity to shop for a few quotes to compare what else is out there.
What to watch out for when changing jobs
Chances are you’ve got a lot on your mind in the midst of this career change. But taking the time to let your provider know could save you money on monthly premiums. Remember to fill them in on:
- Changes to your mileage. Update mileage estimates if your new commute is more or less lengthy than before, since this affects the amount of risk you pose to the insurer.
- Your new job title. Certain jobs pose more risk to insurers, but if you’re taking on a less stressful or risky position, your rates could go down. Keep in mind that the occupation you list must still be accurate — otherwise, you’ll be guilty of insurance fraud and risk a denied claim in the future.
- Driving the car for work. If you’re using your car to deliver goods, or if one of your employees will be driving the car, you may need to buy commercial car insurance to make sure you’ll be covered in an on-the-job crash. If your new job is driving for an app like Uber or Lyft, you may need to consider rideshare insurance. These are hybrid policies that cover you for personal use and also when you’re on the grind.
Other factors used to calculate my premium
The amount you pay for your car insurance policy is a reflection of how likely an insurer thinks you are to make a claim, and how expensive that claim is likely to be. And some of those factors can also be influenced by your job.
- The car you drive. A fancy car to impress clients will have a higher insurance rate, but you can get cheaper insurance for a luxury car with extra safety features.
- How you use your car. More time in the car for your job means higher rates. And a shorter commute will help you save on car insurance.
- Your driving history. Jobs involving late night or long hours could make you more likely to get in an accident, and having accidents on your driving record leads to higher insurance rates.
- The type of coverage you buy. You’ll typically need more coverage if you spend more hours on the road for your job, and extra coverage comes at a price.
- Where you live. Living in a safer area close to your work will net you cheaper rates.
Your career and level of education can affect how much you pay for insurance with certain insurers. While highly educated people with low-risk careers may benefit from this, people who don’t have a college degree or do have a high-risk job may pay less with an insurer who doesn’t factor in your job.
To get the best rate on your car insurance, compare different car insurance providers to find the right fit.
Common questions about car insurance and your career
Image source: Getty Images
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