A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products, including home, life, auto, and commercial, and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, mainly in the insuranc...

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Reviewed by Leslie Kasperowicz
Farmers Insurance CSR 4 Years

UPDATED: Oct 18, 2021

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Important facts to know...

  • Many insurance companies consider education levels to rate how much premiums you pay for your car insurance
  • Your first-time car insurance may be more expensive due to the high-risk levels associated with young drivers
  • Your credit score and driving experience affect your auto insurance rates
  • You can take a driver’s education course to improve your chances of being pulled out the high-risk pool and lower your rates

As college graduates step out to begin their own lives, one of the critical decisions they need to make is on insurance covers to take. Car insurance is a must-have package as you start life on your own.

Not only do you need it, but it’s also illegal to drive without car insurance cover.

You will probably find many options available in the market, but it takes a lot of shopping around to navigate your way through the maze of insurance policies and pick an affordable cover that will take care of all your desired needs.

The following facts will make your journey of finding affordable graduate car insurance easier.

If you want to go ahead and start comparison shopping for better auto insurance, enter your ZIP code above!

How Education Impacts Car Insurance Rates

Many insurance firms usually offer discounts based on your education levels. The amount of discount, however, differs from one company to another and you need to shop around to find the most appealing offer.

According to the Consumer Federation of America’s report in 2013, Liberty Mutual quoted car insurance rates of about 10 percent to 13 percent higher for high school graduates as compared to college graduates. College graduates enjoyed a further 15 percent discounts while those with higher degrees enjoyed a 17 percent discount.

Current college students can also access good discounts from insurance firms.

You can access good rates when you shop around for insurers who recognize education levels to calculate their premium rates.

Some insurance companies, however, do not consider occupation or education levels when making their rates.

In 2007, Kevin McCarty, the Florida Insurance Commissioner reported that many insurance companies use education to organize members into various affiliated companies with varying price levels.

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Why Education Impacts Car Insurance Rates

Insurers generally base their rates on factors that correlate with risk levels and the number of claims. Education is one aspect that affects risks, though there are various schools of thought on the same.

The New Jersey Department of Banking and Insurance reported in 2008 that claims paid out to people with high school education, or less were 10 percent more than those paid to people with associate degrees, 26 percent more than people with bachelor’s degrees, and 38 percent higher than people with masters degrees.

Additionally, Florida’s McCarty gave an affirming report in 2007 showing that higher income individuals were more likely to foot some bills for small repairs as opposed to filing claims to the insurer. That literally drives down claims for that category of clients hence reducing losses on the side of the insurance firms.

The Consumer Federation noted in their report that occupation and education highly correlate to risk levels and the likelihood of claims.

Bob Hunter, the insurance director for the Federation, and former Texas Insurance Commissioner, however, has a different opinion. He notes that insurance firms are likely to use education, income levels, and race to discriminate against customers.

He further suggests that the state should ban the use of such demographics with no logical correlation to insurer risks. Hunter said that the higher prices insurance firms charge indicate that the insurers are either overcharging that cadre of clients or have no interest in serving them.

However, Alex Hageli, the director of personal lines policy at Property Casualty Insurers Association of America reiterates that the insurers are justified to use education and occupation to rate customers. He says that the demographics actually correlate with the risk levels.

What you can take away from this is that your college education degree may pay when you consider an insurance firm that factors in education levels to calculate rates. Shopping around will help you find the best choice.

Understand Your Auto Insurance as a College Graduate

There are two main types of auto insurance for college graduates. There is liability insurance and full coverage or comprehensive insurance.

Comprehensive insurance covers for your car and the one you’re entangled with when you’re at-fault.

Liability insurance only covers for the other car when you’re at fault. Liability insurance is mandatory, and you’ll face legal charges if found driving without the liability cover.

If you choose to go for the liability insurance cover, you’ll be responsible for all repairs on your car. Many states, however, require you to take a medical coverage on both liability and comprehensive covers to take care of any bodily injuries for you and your passengers.

Getting the First Insurance Cover Under Your Name

Probably you’ve been driving under your parents’ insurance cover. You may be shocked to find your rates coming higher than what your parents used to pay.

It’s because insurance companies charge young drivers higher rates due to their high risks of causing accidents.

However, if you have accumulated over five years’ experience on the road, you can be able to negotiate lower terms. You can also consider completing a driver’s education course to access the available discounts on the coverage.

For new drivers, your rates may be as high as 10-35 percent more on college graduate insurance.

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Credit Score Factors Impacting Your Price

In addition to your driving history, insurance companies will consider your credit scores to determine how much you’ll pay in premiums.

If you’ve never bought anything on credit, your credit score could be quite low.

You may be forced to have your parent or a friend cosign for your insurance. To access the best insurance rates, find someone with a high credit score.

Find Out if You’re in the High-Risk Pool

Insurance companies sort members into various pools. As a college graduate and new driver, you may be put in a high-risk pool.  Being considered high-risk will cause your auto insurance to go up.

A good approach is to take a driver’s education course and ensure that you report excellent scores.

You can also share your achievement in college to demonstrate that you’re a responsible adult. Showing responsibility can cause the insurer to lower your rates by placing you in a different pool.

Final Verdict

As you’ve seen, several factors affect your ability to access affordable car insurance covers for college graduates.

While you may not find the cheapest rates for the first time, you need to be patient and work on building your credit score, take drivers education course, and drive safely to avoid any claims. Within no time, you’ll be able to get lower rates for your car insurance covers.

Shop around and make several comparisons before settling on your best option.

The most expensive insurance cover may not necessarily be the best, and the cheapest may as well not provide everything you’re looking for.

You only need your zip code search online and find the best choice for your first car insurance cover.

Try our FREE online quote tool and start comparison shopping for auto insurance today! Enter your ZIP code below to get started!