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Dinged or discounted? How non-driving factors affect your premium

By Matt Gephardt and Sloan Schrage, KSL TV | Posted - Apr. 20, 2021 at 8:11 a.m.



SALT LAKE CITY – When it comes to car insurance discounts, you might think of them as rewards for your skill behind the wheel: you are a good driver, you drive fewer miles, you don't get into accidents. But the KSL Investigators found a slew of factors are completely out of your control and could wind up costing you a much higher premium.

Non-driving factors

Owning a home. What you do for work. Being married. Each of those can qualify drivers for big auto insurance discounts, according to a new study from Insurance.com.

None of those factors have anything to do with driving.

"Why in the world would being married give me a discount?" KSL Investigators asked Insurance.com editor Michelle Megna.

"Well, the short answer is that insurance companies will say that based on their actuarial data, or their research, that married people file fewer claims," Megna answered.

According to insurance rate data, that marriage discount averages 8%. Your choice of profession can earn you a 12% discount, while owning a home can save you 7%. If you're a student, good grades can lower your insurance by 16%. And signing insurance documents electronically averages a 9% drop in premiums for policyholders.

"It does touch on a much broader debate that goes on in the insurance industry, about non-driving factors and setting rates," Megna said.

She explained that some states have banned insurance companies from considering such non-driving factors in setting rates for drivers. Utah is not one of them.

In the case of some of these discounts, Megna said the approach seems upside down. Having a safer car with functioning airbags and antilock brakes earns drivers less of a discount than their chosen occupations.

"I was surprised, actually," Megna said of this part of the study's outcome. "Because you would think, the safety of the vehicle would have more to do than somebody's profession."

Income & racial disparity

Having less money can also leave you paying more.

"Poorer families are pretty disproportionately affected by this pricing differences," said Andrew Hurst of the personal finance website, LendingTree.

Hurst recently analyzed insurance rate data by zip code and found people living in poorer communities tend to pay more for their car insurance. That also holds true for Salt Lake City's zip code divide, according to Hurst's data.

"It's about $525 (in Utah) per year that the poor families will pay more than the richer families," Hurst said.

That's a lot of money for folks who can afford it the least, but the issue compounds from there.

"Fewer people (in those zip codes) are able to afford insurance," Hurst explained. "So, more people drive uninsured in that immediate vicinity and raise the rates for everyone else."

Insurance rates in those zip codes might also have much less to do with accidents than whether a car is more likely to be broken into. Zip code data also exposes some racial inequality. According to data gathered by MoneyGeek.com, "drivers living in predominantly white ZIP codes often pay less for car insurance than people living in the same cities in ZIP codes with a lower proportion of white residents."

In that data, Salt Lake City zip codes that have higher populations of Black and Latino citizens pay 12% more for their car insurance.

Talk to your agent

The largest auto discounts do tend to be in the driver's control. Safe drivers pay, on average, 27% less. Those who have no accidents will save an average of 26% on their premium, and bundling your car with your home insurance earns you a 14% discount.

Still, the discounts on factors that have little or nothing to do with the open road are significant.

"Which is why the more that you know about discounts, the better off you are," said Megna. "Because you may not even be aware that's being offered."

Insurance companies do not automatically apply these types of discounts, so it is worth a conversation with your agent to make sure you are getting all the discounts to which you may be entitled, fair or not.

Also, different insurance companies offer different discounts, but therein lies a bit of a rub, because if you switch to another carrier to snag one discount, you might miss out on a loyalty discount offered by your original carrier.

Matt Gephardt
Sloan Schrage

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