How does mileage affect car insurance rates? | Insure.com
How many miles does your car log each week? the answer could play a role in how much you pay for car insurance.
Car insurance companies may take into account the number of miles you drive when setting their rates. if you drive infrequently, such as someone who works from home and no longer travels, your rates may be lower.
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“In general, people who drive less often have a lower chance of getting into an accident,” says Kelly Hernandez, associate vice president of national insurance personal lines telematics.
on the other hand, those who spend many kilometers on the road can pay more. the more you are on the road, the greater the chance that you will have an accident. That means auto insurance companies consider you a higher risk, and therefore your rates will reflect that.
Simply put, insurance companies reward those who pose less of a risk, so drivers who drive less receive discounts on low mileage auto insurance.
why do they ask me for my annual mileage?
Ever wonder how auto insurance companies know how many miles you drive? The answer is simple: they ask you to calculate the total when you apply for insurance.
You may be tempted to cheat and tell a little white lie, suggesting you drive very little in hopes of getting a lower insurance rate. however, it is not advisable to lie about the number simply to get a discount. some insurance companies will request mileage checks during the year if you submit a lower than average number, for example.
If you drive less, because you’re working from home, recently retired, or for some other reason, be sure to accurately estimate your “new” annual mileage. don’t just keep the amount you entered in the past or a predetermined amount the company may have on your form.
There are also other ways auto insurance companies can determine your annual mileage. instead of you telling them, they can monitor your driving performance and mileage if you sign up for one of their “pay-as-you-drive” or “usage-based” insurance plans. We’ll explain more about those options and how to get additional discounts shortly.
what are travel miles and how do they affect my car insurance rates?
Insurance companies are also interested in how many miles you drive to and from work. they want to know how many miles you drive and how many days a week. this can help the auto insurance company better assess whether the total number of miles you estimated you drive each year matches reality.
For example, if you live in a suburb of a larger metropolitan area, basic insurance rates tend to be better. but if you travel 40 miles roundtrip to work in the center of that major city, you can cause your rates to go up. That’s because you’re commuting to work in the busy, traffic-heavy metropolitan area, making you a higher risk of being in an accident than if you were driving five miles to work in your local area with less traffic.
In general, if you drive more than 20 miles each way to work, your auto insurance rates will be higher.
Today, fewer people commute to work. “As a result of the pandemic, we are seeing consumer driving behavior change permanently in many cases,” Hernandez says.
As a result, there has been a “remarkable increase in new customers” who can benefit from mileage-based insurance programs, he says.
what is considered low mileage for auto insurance?
Determining what qualifies as “low mileage” depends on state law, as well as your auto insurance company’s own guidelines. For the most part, insurance companies consider 12,000 miles a year to be less than average.
However, some insurers find that you must drive less than 10,000 miles to qualify for low mileage and wait to give further discounts until you get below that number of annual miles.
“The typical candidate who would benefit from a mileage-based insurance program drives less than 10,000 miles a year,” Hernandez says.
Some insurers may offer even higher discounts for low mileage if you drive less than 7,000 or 5,000 miles a year.
Insurance companies tend to have car insurance mileage brackets and their rates may be higher or lower depending on where the annual mileage is.
Auto insurance mileage bands are simply the internal tier system auto insurance companies use to determine whether motorists drive an average amount, more or less. they are based on the unique algorithms of each auto insurance company and any related state laws.
common mileage groups
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Companies use mileage brackets to determine insurance rates based on your miles. It usually varies from company to company. but there are some common mileage brackets used by many insurers.
The table below shows common mileage bands along with the percentage increase in insurance rates as mileage increases.
mileage over 20,000 stayed the same, 0% increase. therefore, in this example, annual mileage of more than 20,000 miles was rated no worse than if you were driving only 20,000 miles per year.
insure.com has determined that the cost of an auto insurance policy with 20,000 miles or more driven annually is 36% more expensive than if you drive 5,000 miles or less per year. in our example, the driver with less than 5,000 miles would save about $750 compared to the driver who was on the road for 20,000 miles or more.
what is the annual mileage for auto insurance?
Americans drive an average of more than 13,000 miles per year, according to data from the department of transportation’s federal highway administration (fhwa) website, which was last updated in May 2022.
Annual mileage totals affect insurance premiums because the number of miles you drive predicts the risk of you filing a claim.
The amount drivers pay for their insurance premium is determined by the number of miles their cars travel. the higher your mileage, the more expensive your insurance policy will be. on the other hand, lower mileage means a lower monthly payment.
how to get low mileage car insurance?
To get the best rates associated with low mileage auto insurance, you need to determine if you qualify for the benefit by following the steps below:
- calculate your current average mileage. reset your car’s odometer to zero. then make a note of the number of miles your car travels over the next week. To obtain the current annual average mileage, multiply the odometer value obtained by 52.
- after calculating the current average mileage, contact your insurer, request quotes to see if you qualify for low mileage auto insurance
- If you drive less than 26 miles per week, you may have another option: “pay per mile” insurance. With this type of coverage, you pay for every mile you drive.
- new jersey
- If you drive fewer miles per year, you represent less risk to your insurer and therefore pay less.
- Apply for a low mileage discount and adjust your annual mileage with your insurer if you recently started driving less.
- To track your mileage and get reports on your driving behavior, consider a usage-based insurance program offered by many companies.
what is the average annual number of miles driven per year?
us drivers travel 13,476 miles, on average, according to the most recent fhwa data.
average annual miles per driver by age group
low mileage discounts
low mileage discounts vary. auto insurance providers talk of offering up to 20% for a low mileage discount; however, our data studies show that many drivers earn 5% or less on average nationally.
California is one state that gets better mileage discounts than others because of its unique laws about what and how insurance companies can use rating factors. California drivers get about an 11% low-mileage discount, on average.
Under state law, mileage is one of three main factors insurance companies can use, the other two being the driver’s safety record and years of driving experience. therefore, if you drive fewer miles in california, the discount is greater. on the other hand, if you drive many kilometers, your rates will be higher.
Is there low mileage insurance?
While mileage is typically only one part of the rating factors auto insurers consider when setting rates, there are programs offered by some insurance companies where mileage plays a much larger role in setting your rate. these programs are often referred to as pay-as-you-go insurance, or “pay to drive.”
metromile is a mileage-based insurance company. has a two-part pricing system where you have a low monthly base rate and then a second mileage rate.
Mileage charges are capped at 250 miles per day (150 in New Jersey).
metromile is available in the following states:
another insurer per mile is mile auto. says drivers can save 30% to 40% off their current car insurance rates.
mile auto doesn’t require you to install anything to monitor or track your mileage. instead, he just takes a picture of your odometer once a month and sends it to you. the miles you’ve driven plus your base fare add up to your monthly premium.
mile auto is available in the following states:
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Other insurers to consider:
nationwide has its smartmiles pay-per-mile program. Like Metromile, it has a base fare and then a cost per mile. The program is available in 45 states, Hernandez says. “If you think you drive less than the average customer, smartmiles might be a good option to consider,” she says.
allstate has milewise, which has a daily rate plus a per mile rate to give you your cost per day. this program is available in more than a dozen states.
There is also state farm drive safe and save with onstar which tracks your mileage and offers discounts based on annual mileage.
If you don’t drive much in a year, check out these programs to see if they’re available in your state and would meet your specific needs. if so, give one of them a chance to save.
If for any reason you don’t like the program, you can go back to a policy that doesn’t take miles so seriously.
Will a usage-based insurance program help me save?
Many insurance companies offer usage-based (ubi) insurance for drivers to try. these programs will take your mileage into account, but are more focused on monitoring your driving behavior to see if you’ll get a discount.
Here’s an overview of some of the usage-based offers:
photography of progressive. snapshot was one of ubi’s first rating programs. your driving is tracked through a mobile app or tracking device that you connect to your car’s on-board diagnostic port.
Tracking reveals your driving habits, such as how much you drive, when you drive, and how you drive. braking too hard or accelerating too much can lower your driver score, which could increase your rates in some states. if you show good driving behavior instead, you’ll get a discount.
allstate’s drivewise. A little different from milewise, this program asks you to connect a device and determines if you can get a higher safe driver discount. allstate says the discount can be up to 40%.
sign of farmers. By signing up and downloading the Farmers Signal app, you have a chance to get discounts on your next renewal if you show good driving habits, though it’s also possible that risky behaviors could increase your costs.
You’re also eligible to win prizes in a drawing each month if you keep your Focused Driving Score at 80% or higher.
how to save on car insurance?
Whether you drive a few or many miles each year, the key to finding the best-priced policy for your needs is to shop around.
If you drive fewer miles a year, be sure to alert your auto insurance company and see if you can lower your premiums.
Also, look around at renewal time to see if other insurers offer better discounts and may beat your insurer’s rate quote.
If you rack up a lot of miles behind the wheel, you should still shop around for a policy. that’s the best way to discover cheaper auto insurance rates and find an insurer that best suits your needs.
If you don’t mind your auto insurance company monitoring your driving, look into usage-based programs and take a test drive. most of these programs allow you to withdraw if you find that your driving style does not offer you discounts.
Mileage-based car insurance, at least in part, makes sense. The more you are behind the wheel, the more likely you are to get into a car accident. however, it is just one of the common rating factors that auto insurance companies look at. So even if you drive a lot, there are plenty of other ways to lower your car insurance rates.
-penny gusner contributed to this report.