What’s the justification for offering lower rates to doctors, teachers, and engineers, because of their occupations? Why are they considered lower risks than, say, professors of philosophy, or librarians? Have any cases been brought to court on this issue?
I ask because I just heard a story about how that’s being done in California.
My guess is that is what statistics show.
On what grounds? I can’t see a case.
I’d like to see those statistics. The problem I have with occupation based rating is that it goes beyond evaluating the insured’s actual driving record, and the amount of driving they do. Engineers, for example, have to be careful and methodical about their work, which might suggest a more conservative and careful approach to driving, but so do CPA’s. In other words, I can think of any number of occupations that should hit at safer driving, so it doesn’t seem fair that only a few occupations get to enjoy the discount.
Conceivably there is sufficient data to give those professions a break (though I have not seen the engineer discount* line item on my insurance bill). It may be a combination of sufficient difference in accident proneness and a sufficiently large number of people in those professions that an occupational discount is good marketing sense. I don’t know that there are enough philosophy professors or librarians that a solid statistical basis exists that they are better drivers or that makes a discount worthwhile.
I have always been a good driver and have never been in a “real” accident. But when I was young I got charged more. Unjust.
Sure, they will discriminate on the basis of this and that–but never anything like race. I bet statistics on race would show that one group causes more problems than another. But they could never get away with that. (Not that they should try!)
So they fool around with this and that. BS.
Do you have a link? I ask because my insurance company apparently uses occupation to set rates in a way at least sometimes. I am a civil servant, and they asked me for my job title and pay grade when I originally called for a quote. My pay grade doesn’t give any indication of what I actually do (for that matter, neither does my title,really) but it does give other information- the approximate amount I’m paid, the fact that I am overtime-exempt, the fact that even though I don’t supervise anyone and am at the lowest level in my title , my employer considers my job to be the equivalent of second level supervisors in other agencies, and that I work pretty much independently- my supervisor doesn’t even see most of my work. And while I can’t think of any reason to expect engineeers to be lower risks than librarians, I can imagine that both engineers and librarians might be lower risks than mailroom clerks.
You can do your own, they are not obliged to show you anything.
Who said anything about “fair”? And where is the law that says the world is “Fair”? Welcome to the real world. It’s not fair. And it is even more unfair for 99.9% of the world population than it is for you.
Insurance companies, airlines, car rentals, hotels, donut shops etc are free to sell their products and services on whatever terms they want so long as they don’t break the existing laws which may prohibit discriminating on the basis of race but are silent on all the issues you mentioned. Individuals and corporations are free to set their marketing and sales policies freely and to engage in discriminatory pricing. They can give discounts to students or seniors or the handicapped. Welcome to the free market. It isn’t fair, but it’s the best thing we got.
Am I the only one who saw “some occupations” and thought of Iraq and Afghanistan, then wondered what the hell that could possibly have to do with car insurance?
Insurance company rate schedules must be approved by the state’s insurance commissioner (IC). The IC is selected by the governor of the state or sometimes elected by the people of the state. The IC acts in the best interests of the consumers of the state, not in the best interests of the insurance companies. So, yes, technically a company can charge what it wants to whom it wants, but not if the IC rejects those conditions.
In order to get a rate schedule approved, the insurance company must show actuarial data illustrating why some drivers will be charged differently from others. The most common criteria include the age, gender, years of driving experience and 3-5 year motor vehicle record. A few years ago, credit history was discovered to be a stronger indicator of potential for losses than even your actual driving record. My own experience has shown me that people in certain occupations are more risky (clergy & insurance agents, oddly enough are abysmal) while other drivers are less prone to have an accident.
The reality is, every insurance company is different and pays attention to different things. If there is a group of people who get a break that you don’t, the correct assumption is likely to be: there is data to support the discrimination.
From The California Department of Insurance:
direct link
I couldn’t find a definitive list of all 16 secondary factors, but I suppose occupation could be among them. FTR, I’ve been driving in California for over 16 years and can’t remember ever being asked my occupation when shopping for insurance.
I wasn’t asked either, but in one of my insurance bills many years ago there was a flyer which listed certain occupations as being eligible for a discount. I applied and got the discount.
In other words, the customer had to actively seek out the discount.
Ed
I don’t mind them giving discounts to anyone. What I dislike is that they will raise rates on people who have bad credit. Does bad credit make you more likely to have an accident? I also noticed on one website that State Farm just sent out letters to its customers saying that they won’t cover your car if it is incinerated by a nuclear device.
That brings up an interesting question: Should insurance companies be allowed to discriminate on the basis of race? They already discriminate on other factors that are beyond one’s control, i.e. age and gender, and if there’s actuarial data showing that people of a certain race (however you want to define “race”) are more of a risk, shouldn’t insurers be able to use race as a factor as well?
Years and years ago, insurance companies wouldn’t insure folks who bought their car on credit. The thinking went, anyone who was stupid enough to buy on time was a bad risk.
In our ever-spiraling down the tubes “nothing is my fault” society, insurance companies discriminating on the basis of any number of factors really rubs our less-gray matter types the wrong way and they would prefer safe drivers to subsidize everyone else. Government mandates and other issues related to freedom of association have really screwed things up, and it’s unlikely for the situation to improve.
Yes - people with bad credit tend to have more accidents. Does that surprise you?
This, of course, shows what marketing is all about. Set a rate and a surcharge for those with bad credit and people will cry discrimination, but set a higher rate and give a discount for those with good credit and nobody complains. And yet you are doing exactly the same thing.
I was asked for the first time when I bought insurance through my employer, who used to be G.M. This was about a year ago.
…I heard a story…" ? :dubious: I heard a story “about a man named Jed…” too, but?
Never heard of it, come back with a cite.
How about a personal example?
I live in California, and I get a discount on my auto insurance because of my occupation. (I’m an engineer.) I’ve already mentioned this in this thread.
So, obviously, it DOES happen in California.
Ed
I see a problem with this, even ignoring the political/cultural/moral/social issues. Contrarily to age and gender (at least in 99,9% of cases for the second item), race can’t be clearly defined. And what could prevent you from stating you belong to race A if race A gets a discount, anyway? Who’s going to prove you actually don’t?