Your job and education may dictate how much your car insurance is worth

I went online last week to get car insurance from Mercury Insurance. I did this job twice, listing my job as an engineer.

Everything else was the same – my age, address, driving history, car make – but as an engineer, I was given a lower monthly rate: $247.88 instead of $262.88 and a possible annual income of $179.89.

My price estimate was inspired by a request issued on July 18 by Consumer WatchdogA group of taxpayers and consumer advocates, opposes Mercury Insurance Co.’s request. to the California Department of Insurance to increase its auto rates.

Mercury insurance, the largest auto insurance company in Californiais asking to raise its prices to customers by 6.9%, or $ 131 million.

But the main thing driving Consumer Watchdog’s demand for a public hearing on the proposal is what it says is that Mercury’s prices are not only “excessive” but also “unfairly discriminatory.”

“It’s an issue that we’ve been fighting for years to reform in California where insurance companies have been illegally overcharging people based on coverage,” Consumer Watchdog Director Carmen Balber told me.

In 1988, Californians passed 103 thoughts, which called for insurance rates to be based primarily on criteria such as driver safety and skill rather than arbitrary discrimination, such as employment status, credit, residence or gender. Rate increases and other rate setting measures must now be approved by the Department of Insurance.

The use of gender in price setting was legally prohibited January 2019.

The department has never approved the use of education or service as a determining factor, but insurance companies have found a way to offer discounts to what they call “affiliated groups.”

Depending on the company, these exemption groups include insurance workers and members of alumni or other professional organizations, but there are also more groups, in the case of Mercury, civil servants (if they are in positions or skills), scientists (with an active bachelor’s degree jobs in other sectors) or engineers.

“Companies pick and choose customers, and that’s creating discrimination in the auto insurance market,” Balber said.

Although teachers and members of the military, too, are eligible for the discount, the groups are opposed to higher incomes and more education.

Disruptive regardless of driver safety

The data backs up the results.

Three-quarters of people in vulnerable areas do not belong to these special groups, according to a 2019 analysis insurance companies that are “affiliated groups” with the California Department of Insurance.

Report found that outside of such groups, about 60% of customers, pay 1.5% to 25.9% more on their car insurance premiums. They also tend to live in low-income and low-education ZIPs with large populations of color.

Other search and reports found similar differences in California and the rest of the world.

More importantly, it’s not easy to see how low-income people and especially black and brown people could be at risk if the cuts favor people with advanced degrees and high-paying specialty jobs.

On balanceBlack and Latino Californians are less likely to have a bachelor’s degree or higher and earn less than their white counterparts.

Undocumented residents, who often work in low-wage jobs, are especially locked out of all these benefits.

“California insurance companies are misusing a person’s work and education to pay auto insurance premiums,” a group of about a dozen civil rights and community organizations said. he wrote to Insurance Commissioner Ricardo Lara in a few months for the government to investigate.

“What’s even more interesting is that full-time workers pay more for car insurance than doctors, engineers and other high-wage earners can pay less.”

In his letterThe union stated that “Farmers Insurance pays a factory worker 14.5% more per year than an accountant or a doctor,” and, “Progressive Auto Insurance pays an office manager with a high school diploma 6.3% more per year than the same driver with the same job as someone with a bachelor’s degree.”

Unlike pricing metrics based on things like safety which lowers prices for everyone because there are fewer accidents and claims, jobs and education have little to do with the risk of driving.