Smart Auto Insurance Blog

The state of Pennsylvania offers some consolation to people paying expensive student loans, according to Jon Delano from KDKA Pittsburgh, but not for much longer if a state legislator has his way. Pennsylvania auto insurance companies currently offer reduced premiums to those who are better educated. Their justification is that people with more education are better drivers and less likely to make claims for an accident than someone with less education, like a high school dropout. Using that logic, it would make sense to give a rate break to individuals with advanced degrees, much like insurers raise premiums for teenagers because they tend to take more risks when driving, or lower them for married men since getting hitched supposedly calms them down.

However, the chair of the PA House Insurance Committee thinks these policies are discriminatory. Delano says that Representative Tony DeLuca wants to pass a law barring the practice, which I think will be an uphill battle. He points to the exceptions; the Ph.Ds unable to drive for beans and the amazing drivers who never finished the 5th grade. While those outliers do exist, insurance companies make decisions about their policies based on research of the majority’s driving behavior. Not all single males under 25 are reckless drivers, but statistics show that there are enough of them to justify higher premiums for that group.

DeLuca suggests that insurers should focus solely on a person’s individual driving history when figuring out their rates, which is probably best for everyone. It’s a good idea to get multiple auto insurance quotes and compare rates. But in that case, how will new drivers with no history get auto insurance?

(Photo credit: keithreifsnyder under CC 2.0)

Mike Chaney, the Insurance Commissioner for the state of Mississippi, has recently decided to allow local auto insurance company Alfa Insurance to reduce their rates, along with letting them offer an extra discount to long-time customers. Starting on December 28th, the Associated Press reports that Alfa will reduce its rates by approximately 2.1%, resulting in about $1 million in savings for customers on their Mississippi auto insurance quotes. The discount for loyal policy holders, which goes into effect the same day, is 15% for customers that have been with Alfa for three years or longer, and 20% for those that have had their Alfa policy for at least six years.