A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Written by Laura Berry
Former Insurance Agent Laura Berry

Melanie Musson is the fourth generation in her family to work in the insurance industry. She grew up with insurance talk as part of her everyday conversation and has studied to gain an in-depth knowledge of state-specific insurance laws and dynamics as well as a broad understanding of how insurance fits into every person’s life, from budgets to coverage levels. Through her years working in th...

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Reviewed by Melanie Musson
Published Insurance Expert Melanie Musson

UPDATED: Mar 13, 2020

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Car insurance premiums vary from one person to the next. Generally, car insurance companies charge higher rates to people who pose a higher risk. Individuals who are likely to get into car accidents will pay more for insurance. So will people who drive expensive cars. Risk factors are not always easy to predict in advance, however, and insurers utilize a wide spectrum of statistical data to determine the cost of coverage. By looking at driving trends among various demographics, insurance companies can make estimates of how much risk any given driver may pose.

Most people know that men pay more for car insurance than women and young drivers pay more than older drivers. There are several other factors at work that determine the cost of auto insurance, however, and you may not realize the influence they have on your premiums. One factor that many people are unaware of is education. As a rule, insurance companies offer more discounts to people with higher education.

This is true of all levels of education. For example, high school graduates pay less for insurance than people who never received a diploma. College graduates pay less than high school graduates, and people with doctoral degrees pay the least for insurance. Overall, there is approximately a 19% difference in premiums between high school dropouts and people with doctorates.

How much can you save with a Higher Education?

This works out, on average, to a difference of about $500 per year. The individual gradations between other education levels are less severe as the education level rises. For example, there is an average difference of premiums between a high school dropout and high school graduate is around $260 per year. The difference between a master’s and doctoral degree is only about $30 per year. Because of the slight gradations between different education levels, you may not immediately notice the discount as you proceed through your schooling, but your rates will slowly decline with each milestone you pass.

Student and Alumni Discounts

While you’re in school, your insurance rates are affected by your grades. High school and college students with high GPAs pay about 10% less for insurance than people who do not have an A and B average. This is one of the first ways that young drivers are able to cut down the cost of their insurance premiums, and some companies extend these discounts for several years by offering alumni discounts.

In other words, if you’ve had good grades throughout college, you can continue receiving discounts until you turn 25, when your premiums would normally begin to drop. This is a good way for young drivers to save money on insurance, and it’s a good incentive to perform well academically.

Why Does Education Matter?

The reason that good students pay less for insurance is also why people with high levels of education pay less: Educated people tend to take fewer risks. They may not necessarily be better drivers, but they often do not participate in high-risk behaviors like drinking and driving or disobeying traffic laws. Of course, there are plenty of exceptions to this rule, but on a large demographic basis, educated people tend to be responsible drivers. They’re also usually older and have more experience driving thanks to the time it takes to get an advanced degree.

The other reason that people with higher education pay less for insurance is that they have other coinciding factors that reduce the cost of coverage. For example, people with advanced degrees tend to make more money, which makes it more likely that they will own their own homes, have multiple vehicles, or buy life insurance. These additional policies can result in subsequent discounts from the insurer.

Maximizing Discounts

When getting an insurance quote, be sure to fill out the form accurately and completely to get the best possible discount offers. When you speak with the representative for the company, you can make sure they’re aware of any special circumstances that should qualify you to get discounts. For example, you can mention your degree or provide transcripts to take advantage of lower rates.

You can also maximize your insurance savings by taking special driver’s education courses. Furthering your education and skills as a driver can help reduce the cost of your premiums and make accidents less likely to occur. Be sure to ask what programs your insurance company will endorse.

Taking advantage of discount programs helps to keep your premiums low and gives you the best possible price for your coverage. If you already qualify for lower rates, there’s no reason not to take advantage of any discount you can.