Over the last few months, we’ve been hearing a lot about Occupy Wall Street and what its adherents are demanding. They’re calling themselves “the 99%” and are protesting what they claim are unfair advantages given to the top 1% of wage earners in America.
Since this is a blog about auto insurance, we thought we’d pose the question: do rich people pay less in car insurance than poorer people?
Like other areas — such as income taxes — there’s no clear-cut answer. But there are some policy pricing components which would tend to favor wealthier drivers more so than those who are considered middle-class or poor.
Here are the stats:
- Rich people tend to live in nicer neighborhoods, where crime rates (including auto theft) are lower. So their premiums are likely to be less expensive than someone who lives in a higher-crime area.
- There is a correlation between age and wealth (up to a certain point). And since older drivers tend to have lower rates than younger ones, it might seem like those who can better afford auto insurance don’t have to pay as much for it.
- Married couples tend to generate more wealth than single individuals, and married people are statistically better drivers than unmarried motorists. So people who wear wedding rings will probably pay less for auto insurance than their single counterparts.
But here’s the great thing about auto insurance: its premiums are almost completely determined by statistical factors. In other words, it doesn’t matter how much money you make, who you know, or whether your parents are rich: you’ll still get the same basic rate as someone else in your demographic category. With this in mind, here are several auto insurance pricing factors that cross all income boundaries:
- Type of vehicle. Premiums for various car or truck models are all over the map – so you can pick one in your price range that minimizes your rates.
- Usage. If you don’t drive very much to work (or take the bus or mass transit), your premiums will be lower – no matter how much that job pays you.
- Driving record. People rich and poor get traffic tickets, DUIs, and accidents on their driving records. Avoiding those “blemishes” will reduce your rates.
- Prior insurance claims. Choosing to pay for a repair out of pocket rather than submitting an insurance claim will prevent your future premiums from rising.
- Creditworthiness. People in all income brackets can fall behind on credit card payments or default on mortgages. Fulfilling your financial obligations can keep your credit score high – and your auto insurance rates low.
- Smoking. People of all backgrounds smoke (though their nicotine delivery brand of choice may differ). Quitting smoking is a way to get a discount on your auto insurance premiums.
- Grades. If you’re a student, it doesn’t matter if you’re at a public school or a cream-of-the-crop private institution – getting high marks can earn you a break on your car insurance rates.
The bottom line? There are steps that everyone can take to lessen the financial pain of auto insurance — regardless of their income percentile. For suggestions on how you can lower your rates, talk to your auto insurance agent.