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Is Your Job Costing You Money?

Until recently, how your automobile insurance rates were calculated were an industry mystery, with most people believing it was based on age and driving record, and to some degree they are correct in that assumption. However, recent studies, surveys and consumer driven transparency from carriers reveal, to no surprise, that the calculations behind determining what you pay for automobile insurance are more complex than that, and what you do for a living has a direct impact on what you pay for that monthly premium.

Insurance Companies love statistics and complex formulas, but everything they do is generally weighted by risk. In very simple terms, they are seeking the answer to this question:

"If we accept this applicant or renew this policy, will we likely be exposed to

  more losses than our collected premiums will allow us to handle?"

They want to charge the most they can and payout the least they can; that is the revenue model of any insurance firm. Every piece of data imaginable gets fed into the banks of servers that crunch their numbers, and your monthly premium gets calculated, much like a credit score. In fact, you have a FICO based insurance score just like your credit score. Probably only the authors of the software that does the calculation can tell you the real skinny, but in general, there are 10 factors that drive the insurance premium you pay, and your job is one of them.

10 Factors That Determine Your Car Insurance Premium

  1. The Type of Vehicle or Classification
  2. Place of Residence or Geography
  3. Deductibles and Coverage Limits
  4. Driving Record or History
  5. Drivers Age
  6. Terms and Conditions of the Insurance Company.
  7. Demographics
    1. Gender
    2. Marital Status
    3. Age, Profession, Educational Attainment
  8. Credit Rating
  9. Safety of Your Car
  10. Number of Drivers and Vehicles You Are Insuring and Mileage

Professions Impacting Your Automobile Insurance Rates

High Risk Low Risk
Doctors Telecommuters of all kinds
Attorneys Engineers
Judges Pilots
Real Estate Brokers Teachers
Social Workers Retired/Elderly
Architects  
Executives  
Business Owners  
Being a Teenager  

There are some obvious ones on the list, but also some surprises. For instance, Doctors are viewed with the same risk as teenage drivers. Stay at home mom's have a low risk, because they don't commute (tell that to a soccer mom with a straight face). The reality is, like every other possible demographic factor, the insurance companies constantly crunch numbers to try to identify risk. As of the Summer of 2012, in a study released by dmv.org some jobs that are known to impact your premium calculations.

The rationale behind the data analysis seems to center on two primary factors of employment. How much you are behind the wheel and the stress level of the associated job. A commonly used example is the scientific/teaching community, viewed as analytical, conservative and safe low risk occupations. Entrepreneurs, sales people, stock brokers, etc. are viewed as stressful, high risk type jobs that attract less than ideal drivers. While it may seem like profiling, and it is, it is the way the insurance industry works.

Don't Change Your Job Just Yet

While profession certainly is one of the factors in determining you rates, it is minor compared to factors like geography, coverage levels, vehicle classification and driving record. By shopping around and being aggressive with getting quotes, like at carinsurancequote.net, you should be able to get reasonable rates regardless of your occupation. In the current job market most of us carry multiple titles, so you can always tweak your job description to see if it helps with your rates. MoneySavingExpert.com even has a job picker tool and guidelines to help.

 

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