Can you get car insurance with no job?

You can get car insurance while unemployed, but expect your rates to rise if (1) your credit score suffers, (2) your mileage increases, or (3) you file any claims.

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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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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Sep 15, 2020

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Here's what you need to know...

  • You can legally be licensed to drive a motor vehicle if you’re unemployed, disabled or retired
  • Licensed drivers can also legally purchase a vehicle without a job but may have difficulty finding financing if they don’t purchase outright
  • Insurance companies don’t require policyholders to be employed to buy insurance, but employment status can affect rates with certain companies

When you sit down to take your licensing exam with the Department of Motor Vehicle, you’re required to provide your personal information that proves your identity.

Not only can you hold a license without a job, you can own a car without a job too. The only time employment really becomes an issue is when you’re financing a car and you don’t have a regular and stable income.

Since a job isn’t a prerequisite to driving or owning a car, it makes sense that it’s also not a prerequisite to buying insurance. If you’re in the market to buy insurance and your employment status has changed, it’s important that you realize how having a job impacts your rates.

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Why isn’t employment an underwriting requirement for car insurance?

Since auto insurance is a legal requirement in virtually every state, all residents who can legally drive need to be able to have access to it.

When you’re applying for a driver license or registering a car, you’re asked for your name, date of birth, residence, social security number, but you’re not asked for the name of your employer.

Unemployed people all have the right to drive a vehicle if they can prove they have the skill and aptitude.

Since drivers who own cars legally must provide proof that they are insured, state departments won’t allow carriers to disqualify someone’s application for coverage because they’re unemployed.

In fact, disqualifying a prospective applicant for the following employment-related factors is considered to be discriminatory and is prohibited:

  • Income
  • Occupation
  • Employment history
  • Employment inquiries

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What are the guidelines for getting car insurance?

Having a job might not affect your ability to get auto insurance, but there are plenty of things that can.

Insurance companies are free to set their own unique underwriting guidelines as long as they adhere to the standards that are set by the State Department of Insurance.

The underwriting guidelines must be relevant to risk and how likely the household might be to file a claim.

Some common requirements that you must meet before you can buy standard insurance include:

  • Valid driver license
  • Vehicle registered in your own name
  • A private passenger vehicle, truck or van that doesn’t exceed certain gross weight
  • A satisfactory driving record with limited violations and free of serious violations
  • Criminal record free of insurance fraud convictions or arson convictions
  • A satisfactory accident history

Can having a job affect your car insurance rates?

Not having a job can’t affect your ability to find insurance, but it can affect your auto insurance premiums in more ways than one.

Before you can fully understand why your employment status would lead to higher or lower rates, you need to understand how rates are set.

How are rates calculated in the car insurance industry?

Licensed carriers must file their base rates for approval with the state department that regulates the industry.

Once these are filed and approved, insurance companies are free to use a long list of different rating factors to calculate personalized rates based on the base rate for each applicant.

All rating factors have an effect on premiums. Some of the most common factors considered include:

  • Age, gender, and marital status
  • Years of driving experience
  • Driving record
  • Garaging zip code
  • Accident history
  • Vehicle type
  • Vehicle usage and mileage
  • Credit score

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Which rating factors are directly affected by employment status?

As you can see, some of the rating factors are beyond your control and others aren’t.

You might also notice that the fact that you don’t have a job can automatically impact some of the most common risk factors that are used by all of the standard carriers in the industry.

Here are some ways that your premiums are directly affected when you don’t have a job:

  • Vehicle Usage – Vehicle usage is all about your driving habits. If you primarily drive a car for pleasure, you pay lower rates than someone who drives as a commuter. If you’re unemployed, you don’t have to worry about raising your rates because you drive on congested streets at peak times
  • Annual Mileage –Agents will ask approximately how much you drive your vehicle throughout the year. Many companies rate the average driver as driving 12,000 to 15,000 miles per year. If you drive less than this average, you may qualify for a low-mileage discount. Since you don’t commute, you’ll more than likely drive less than the average commuter
  • Affiliation Discounts –Some companies give occupational or affiliation discounts to drivers who qualify. If you were a teacher, a police officer, or a pilot, for example, you’re considered a lower risk. For those who qualified for discounts, losing the discount could raise your premiums

Which rating factors can be indirectly affected by employment status?

Some rating factors aren’t so obviously affected. If you’re unemployed, it’s possible that your credit could suffer. If you live in a state where credit scoring is used, this could affect your tier and your premiums.

It’s also possible that you could move to a new territory with higher claims rates because of your status. All things to consider as you’re comparing rates or making policy changes.

No matter what your employment status is, it’s important to find affordable insurance rates.

For those who live on a fixed income, finding bargain rates is even, more important. If you’re looking for competitive prices but don’t want to spend weeks comparing quotes, use an online insurance rate comparison tool.

Stop wasting time and find the perfect insurance plan now! Enter your ZIP code in our FREE tool below to compare car insurance rates now!

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