Drivers More Open To Use Of Credit, Education In Car Insurance Quotes

Drivers are not pumping the brakes when it comes to approval of the use of non-driving factors in car insurance pricing—except gender—according to a new Forbes Advisor survey of 2,000 motorists who have car insurance.

Gender, credit, education and occupation are typically used by car insurance companies when setting rates. The survey gauged consumer opinions about these practices.

Here’s a look at what Americans think about factors that influence car insurance rates and how they judge the cost of their own car insurance coverage.

Battles of the Sexes: Using Gender in Auto Insurance Rates

Most drivers surveyed aren’t in favor of car insurance companies using gender when calculating car insurance quotes, but results among females and males differ significantly.

The majority of drivers (62%) said gender should not be a factor in auto insurance quotes. Almost three-quarters of women (72%) don’t support it, compared to 41% of men.

Yet women typically pay less for car insurance than men, according to a Forbes Advisor analysis of how age and gender affect car insurance rates.

In your opinion, should auto insurance companies take a driver’s gender into account when it comes to pricing?

 

Answer % female response % male response
Yes 18% 53%
No 72% 41%
Don’t know/Prefer not to answer 10% 6%

Approval Nearly Doubles for Use of Credit in Car Insurance Quotes

Insurance companies’ use of credit as a factor in auto insurance quotes is one of the more controversial pricing factors. Insurers say that a person’s credit correlates with the likelihood that the person will make an insurance claim. Many insurers put significant weight on credit-based insurance scores when setting prices.

Yet based on Forbes Advisor’s comparison of a 2021 survey to this year, more people are warming up to the idea of credit as a factor in car insurance quotes:

  • This year 42% of car insurance customers believe credit should be factored into car insurance rates.
  • That’s nearly twice as much as last year, when only 22% approved of the practice.

Over a third (36%) of survey respondents didn’t think that a driver’s credit score should be used in determining auto insurance rates, compared to 69% last year. That’s a 48% dip in the number of people who disapprove of using credit scores in car insurance quotes.

To what extent do you agree or disagree with the following statement: “Auto insurance companies should take the driver’s credit score into account when it comes to pricing”?

Sentiment about use of credit score % respondents
Strongly agree 22%
Somewhat agree 20%
Neither agree nor disagree 22%
Somewhat disagree 14%
Strongly disagree 22%

Consumer advocacy groups and some legislators say using credit-based scores unfairly increases auto insurance rates for certain demographics and is inherently discriminatory.

A Forbes Advisor analysis of car insurance rates in the 46 states that allow credit as a pricing factor found that drivers with poor credit experience an average rate increase of 76% compared to drivers with good credit. That translates to about $1,180 annually. California, Hawaii, Massachusetts and Michigan ban the use of credit in setting car insurance rates.

Education: Twice as Many Drivers Now Say Include It

Drivers appear to be embracing the use of educational levels in car insurance quotes. When asked if education should be taken into account, 46% supported the idea, marking a 119% jump from last year, when only 21% supported it.

Over a quarter (28%) didn’t agree that educational level should be considered, compared to 67% last year.

Insurers might include education level in car insurance quotes when they’ve drawn a connection between an advanced degree and fewer insurance claims. And many auto insurance companies give education-related discounts, rewarding drivers who have achieved a bachelor’s or master’s degree or Ph.D.

To what extent do you agree or disagree with the following statement: “Auto insurance companies should take the driver’s level of education into account when it comes to pricing”?

Sentiment about use of education % respondents
Strongly agree 23%
Somewhat agree 23%
Neither agree nor disagree 25%
Somewhat disagree 13%
Strongly disagree 15%

Over Half Say Occupation Should be a Factor in Car Insurance Quotes

More than half of drivers (58%) believe it’s fine to use occupation in auto insurance pricing. In 2021, only 36% of drivers felt someone’s job should be considered in rate-setting for car insurance.

Just 16% of drivers didn’t believe a person’s occupation should affect rates. That’s a big drop from 2021, when 44% said someone’s job should not be a factor in car insurance quotes.

Like other pricing factors that aren’t about actual driving, some insurers give discounts for certain occupations. For example, lawyers, doctors and educators may be able to score lower rates.

To what extent do you agree or disagree with the following statement: “Auto insurance companies should take the driver’s occupation into account when it comes to pricing”?

Sentiment about use of occupation % respondents
Strongly agree 28%
Somewhat agree 30%
Neither agree nor disagree 26%
Somewhat disagree 9%
Strongly disagree 7%

2021 vs. 2022: More Drivers Say Their Car Insurance Rates are Fair

Despite a lack of consensus about using non-driving factors in car insurance rates, most drivers think that their auto insurance rates are fair or have no strong feelings about them. The survey found that 58% of respondents think that their car insurance rates are “fair” or “very fair,” compared to 48% last year.

The findings come even as surging medical costs and increasingly expensive car repairs have caused steady rates over the past several years.

Thinking about how much you are currently paying for auto insurance, do you believe you are paying a fair or unfair rate?

Sentiment about rate fairness % respondents in 2022 % respondents in 2021
Very fair 22% 9%
Fair 36% 39%
Neither fair nor unfair 19% 18%
Unfair 14% 22%
Very unfair 5% 9%
Don’t know/Prefer not to answer 3% 3%

Monitoring Actual Driving? People Are Getting Comfy With It

For people who are very safe drivers, buying car insurance that focuses primarily on actual driving habits may be worth considering, and more motorists are warming up to the idea.

Usage-based auto insurance, which utilizes actual driving data in rates, could reduce insurance companies’ reliance on non-driving price factors such as credit scores, occupation and education. Using telematics, these insurance programs monitor and score actual driving, including speeding, braking and cornering.

More than half (64%) of survey respondents said they’d be “very comfortable” or “somewhat comfortable” with having their driving closely monitored if it could lead to lower car insurance rates. Last year only about half (51%) were comfortable with it.

Would you be comfortable allowing a car insurance company to closely monitor your driving (e.g. with a piece of equipment installed in your car) if it allowed you to receive lower insurance rates for good driving?

Sentiment about usage-based insurance % respondents in 2022 % respondents in 2021
Very comfortable 31% 23%
Somewhat comfortable 33% 28%
Not very comfortable 17% 18%
Not comfortable at all 13% 26%
Don’t know/Prefer not to answer 6% 5%

Over a Quarter Think Other Drivers are Not Very Good or Terrible

There’s no shortage of high-tech telematics programs that can evaluate how safely a motorist drives but that doesn’t keep humans from making their own assessments. Just 12% describe their fellow drivers as “excellent,” and 28% judge them to be “terrible” or “not very good.”

How would you describe most other people as drivers?

Description of other drivers % respondents
Neither good nor bad drivers 33%
Good drivers 23%
Not very good drivers 21%
Excellent drivers 12%
Terrible drivers 7%
Don’t know/Prefer not to answer
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