Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer

UPDATED: Jul 14, 2021

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In a nutshell...

  • Insurance companies use dozens of different rating factors to assess risk and then assign drivers to a rate class
  • All of the rating factors that are used affect a person’s likelihood of having a claim in some way or fashion
  • Not all rating factors that are used when setting rates are directly rated to your driving record or your vehicle
  • Your occupation will have an impact on your rates based on how often colleagues in the field get into accidents
  • Insurance carriers in some states will offer occupation discounts to drivers in certain fields

When you contact an insurance company for an auto insurance quote, you will be asked to provide your occupation.

This isn’t just a general question that’s used for your insurance file, it’s an important detail that is used to help calculate the premiums for a specific policy that’s covering drivers in a specific household.

Insurance companies use several different rate-setting practices when they are calculating their base rates and personalized premiums for each policyholder.

These practices are common industry-wide because they have proven to help insurers assess risk. If you’re not familiar with how your occupation affects your car insurance, here’s a consumer guide to help.

Find the insurance company that offers the best price for the coverage you need. Enter your zip code into our free rate comparison tool above.

What are auto insurance rating factors?

When you’re given a premium quote, the numbers that are drawn up by the insurance aren’t just made up or pulled out of thin air. All of the quotes that you are given are given to you after thought-out calculations are made.

Quoting systems are programmed with algorithms so that rates can easily be calculated.

When a quoting system is being filled out by either the applicant or the agent, your personal information has to be input in the system.

The pieces of information that have a direct impact on your rates is called a rating factor. These rating factors help to narrow drivers into a rating class that isn’t so broad by predicting your probability of filing a claim.

Here’s what will affect your individual risk rating:

  • Vehicle type
  • Age
  • Gender
  • Marital status
  • Geographical location
  • Credit history
  • Claims history
  • Driving experience
  • Driving record
  • Prior insurance coverage
  • Vehicle use
  • Miles driven annually
  • Coverage options and deductibles

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All of the Factors Used Are Weighed Differently

You can’t expect your geographical location to have the same impact on your premiums as your past driving record.

After all, it wouldn’t make sense for your zip code to have more of a bearing on your rate class than the fact that you have multiple infractions on your driving record.

Details like marital status and occupation might not raise your rates by hundreds of dollars, but stacking the factors one on top of each other can make a huge difference.

On the opposite end of the spectrum, having favorable ratings in every risk category can save you a huge chunk of money on your insurance budget.

Why is occupation used for individual risk rating purposes?

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Occupation doesn’t carry the most weight out of all of the individual rating classes considered but it does still carry some weight.

You generally think that your current occupation only matters when you’re interviewing for a job or applying for a loan, but that’s not the case. Insurers care about your occupation because the statistics show it affects your exposure to loss.

Carriers have to be very committed to setting rates if the companies want to profit and stay profitable.

Slipping up on rate-setting practices could be the difference between being financially healthy and going insolvent.

According to the actuarial data that is used by property and casualty insurers, some workers and professionals are more prone to accidents than others.

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Low-Risk and High-Risk Drivers

Claims data can be reported by the individual or by risk class or group. In the insurance industry, data is typically collected from a group of drivers when assessing risk.

Insurers determine how some groups are classified as low-risk drivers and other groups are considered more at-risk of having accidents.

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What occupations are classified as low-risk?

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Drivers that fall into a low-risk job classification will pay a lower rate than the average professional. Typically, these drivers work in a profession that keeps them off of the road and that doesn’t expose them to stress that can translate into unsafe driving habits.

Occupation classes can change from year to year, but generally. they remain pretty fixed. You should check to see if your current occupation or the occupation that you’re studying for falls into this list.

It won’t make sense to switch careers just because one field will cost you more in insurance, but being aware of it is nice. Some of the lowest risk occupations include:

  • Pilots
  • Nurses
  • Teachers
  • Professors
  • Scientists
  • Artists
  • Engineers

What are some of the most popular high-risk occupations?

Jobs that are perceived to be more strenuous on the psyche or stressful can easily fall into a high-risk category.

If you’re in a higher-risk occupation in terms of exposure to claims, you’ll pay a higher rate strictly because of what you do and not because of how it’s already impacted your driving record and claims history.

There’s a host of occupational factors that can quickly translate into a higher monthly or annual rate.

Some of these occupational factors that have an impact include the hours the worker generally commutes to work, whether or not they drive a greater number of trips than the average professional, and jobs that require a lot of on-call reporting.

Here are some of the high-risk occupations reported today:

  • Doctors
  • Actors
  • Real estate agents
  • Lawyers
  • Athletes
  • Photographers
  • Construction workers

Occupation Affects Your Rates in Other Ways Too

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It’s not just the occupational risk class rating that’s going to dictate your rates. Other rating factors can be affected when you change your occupation because your occupation isn’t just a risk factor that can project risk, it’s a detail of your life that can change your driving habits.

Insurance companies need to know how you’re driving your car.

If you’re driving it regularly, you’re going to pay more than someone who has a habit of letting their car sit for weeks at a time.

One was to assess usage is to classify you as one of the following:

  • Pleasure driver
  • Commuter
  • Business driver

A pleasure user is someone who doesn’t drive to and from work or school on a regular basis. You might commute in your vehicle randomly but not on a routine basis. Pleasure drivers pay the lowest premiums.

If you drive a business vehicle or you telecommute, you’ll be a pleasure user. Most drivers are commuters who go to and from one office. Business drivers who report to several sites a week are the highest risks.

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Annual Mileage

The total number of miles that you put on your car throughout the year can be used to project claims probability. Someone who drives 20,000 miles per year is a lot more likely to have an accident to someone who drives 10,000 miles per year.

You won’t pay double the rate, but you will pay for premiums as a high-mileage operator.

Your Geographical Location

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Some areas have a higher demand for professionals in certain fields. If you’re going to move to a new geographical location so that you can land a new job in an area where the salaries might be higher, you should consider the effect it will have on your premiums.

You can check to see what rates are like in the area by using the zip code to solicit new quotes.

Occupation can affect your insurance more ways than one. You can’t change the fact that it’s used as a risk factor but you can shop around for the best rates on your own. Be sure that you’re requesting quotes from several insurers at once.

Use our online rating tool and request estimates in an instant.