2/28/2006New Jersey: Higher Insurance Rates for Blue Collar Workers
Geico charges janitors 70 percent more than it charges lawyers for car insurance in New Jersey.
Geico insurance charges more to insure the automobiles of customers who have a lower occupational status or educational background. In a February 2004 document entitled "Geico Auto Group Guide to Company Placement," the insurer explains how "unskilled and semi-skilled blue- and gray-collar workers" are more of a risk and should be charged higher rates accordingly.
"Risks who have achieved at least a high school diploma or its equivalent are more favorable than those without a high school education," the document explains. "Bachelors, masters and other advanced degrees are considered most favorable."
The New Jersey Star-Ledger compared the rates of a 30-year-old single male from Newark and found if he were a lawyer with a master's degree he'd pay $1686 a year. If he were a high school educated janitor, he would pay $2880 -- 70 percent more.
New Jersey law allows insurance companies to determine rates by factors with a proven relationship to losses. The law prohibits charging based on certain factors such as race and ethnicity.
Geico is the number four insurer in New Jersey with 475,000 customers.