Lower Mileage, Lower Auto Insurance?

Do You Get Lower Auto Insurance for Lower Mileage?

The number of miles you drive each year can have a significant impact on your auto insurance rates. Insurance companies consider drivers who clock up fewer miles to be lower-risk, as they are less likely to be involved in accidents and file insurance claims. As a result, many insurers offer lower rates or discounts for low-mileage drivers.

The definition of low mileage varies by insurer, but it generally refers to those who drive under a certain number of miles annually or infrequently. Some companies offer discounts if you drive under 7,500 or 8,000 miles per year, while others may provide bigger discounts for those driving less than 7,000 or even 5,000 miles per year.

In addition to traditional low-mileage discounts, there are also pay-per-mile insurance policies and usage-based insurance programs that factor in your mileage and driving behaviour to determine your rate. These options can provide further savings for low-mileage drivers.

If you're driving less than average, it's worth contacting your insurer to find out if you qualify for any low-mileage discounts or incentives.

Low-mileage discounts

• Definition of Low-Mileage Driver: According to the Federal Highway Administration, the average driver travels approximately 13,500 miles per year. However, insurance companies may have different definitions, with some considering 12,000 miles or less per year as low mileage.
• Insurance Savings: By driving fewer miles, you reduce the risk of accidents and insurance claims. As a result, insurance companies offer discounts to low-mileage drivers. The discount amount varies but can be as high as 20% or 30%.
• Qualifying for Discounts: To qualify for a low-mileage discount, contact your insurance company to inquire about their specific requirements. Most companies require you to drive fewer than 7,500 miles per year, but this number can differ between providers.
• Proof of Mileage: Insurance companies may require proof of your annual mileage to qualify for the discount. This can be done through odometer readings, verification from a third party, or participation in a safe driving program.
• Insurance Company Options: Several insurance companies offer low-mileage discounts, including State Farm, Safeco, Geico, USAA, Erie Insurance, Nationwide, American Family, Auto-Owners Insurance, and more.
• Comparison Shopping: When seeking low-mileage discounts, it's essential to compare quotes from multiple insurance companies. Rates and discounts can vary, so shopping around can help you find the best deal.
• Other Discounts: In addition to low-mileage discounts, insurance companies offer various other discounts, such as good student discounts, safe driver discounts, and group insurance discounts. Exploring these options can further reduce your insurance costs.

Pay-per-mile insurance

With pay-per-mile insurance, you pay a daily or monthly base rate, and then a small fee for each mile driven. The base rate and per-mile fee are calculated using standard rating factors, including your driving record, age, gender, ZIP code, and vehicle.

For example, with Metromile, you pay a consistent monthly base rate starting at $29 per month, and then a rate of 6 cents per mile driven. So, if you only drive 50 miles in a month, you'll pay $29 plus $3 for the miles driven, making your total bill for the month $32.

• Allstate (Milewise)
• Metromile
• Mile Auto
• Nationwide (SmartMiles)
• Noblr

Who is pay-per-mile insurance suitable for?

• People who work from home
• Occasional weekend drivers
• People who walk or take public transport often
• College students who don't commute to class
• Drivers of leased cars with strict mileage limits
• Individuals or families with an extra vehicle that is rarely used

Usage-based insurance

Insurance companies use a telematics device or an app on your phone to track your driving habits. The program will monitor things like mileage, in-car phone use, braking habits, speeding, and other behaviours that can increase or decrease the risk of an accident.

Every UBI program is different, and not all of them offer discounts for low mileage. Before you enrol in a program, be sure to find out if mileage is tracked and whether it is factored into your rate. It's also important to note that a discount is not guaranteed, and your rates may increase based on the telematics device data.

Examples of UBI Programs

Many insurance providers offer UBI options, including:

• Esurance DriveSense®
• Liberty Mutual RightTrack®
• Nationwide SmartRide®
• Progressive Snapshot®
• State Farm Drive Safe & Save™

Pay-Per-Mile Insurance

Pay-per-mile insurance is another option for low-mileage drivers. This type of insurance is based on the number of miles you drive and usually features a base rate. Total costs vary based on factors such as the type of vehicle, your age, and your driving history. Pay-per-mile insurance tends to include full coverage, including bodily injury and property damage liability coverage, as well as comprehensive coverage.

Some examples of pay-per-mile insurance providers include:

• Allstate Milewise®
• Nationwide SmartMiles®
• Metromile
• Mile Auto

Telematics apps

Some popular telematics apps include:

• Progressive Snapshot
• Allstate Drivewise
• GEICO DriveEasy
• State Farm Drive Safe & Save
• USAA SafePilot
• Metromile per-mile insurance
• Root Insurance
• Noblr
• American Family MilesMyWay

While telematics apps can offer significant savings on auto insurance, it's important to note that they may also lead to higher rates for drivers who exhibit risky behaviours, such as harsh braking or rapid acceleration. Additionally, some programs may not accurately distinguish between drivers and passengers, requiring users to dispute collected data.

Mileage-based premiums

There are two main types of mileage-based premiums: low-mileage discounts and pay-per-mile insurance. With low-mileage discounts, you can get a percentage off your premium for driving less. This is usually in the range of 5-20%, but it can go as high as 30% with certain companies. Pay-per-mile insurance, on the other hand, charges you a base rate plus a per-mile rate. So, the more you drive, the more you pay. This type of insurance is good for people who rarely drive or drive far below the national average.

Some companies that offer low-mileage discounts include:

• USAA
• Safeco Insurance
• American Family Insurance
• Farm Bureau
• PEMCO
• State Farm
• Geico

Some companies that offer pay-per-mile insurance include:

• Metromile
• Mile Auto
• Allstate Milewise
• Nationwide SmartMiles

In addition to these options, there are also usage-based insurance programs that track your driving behaviour and give you a discount for safe driving. These programs may also take your mileage into account when calculating your discount. However, they may not be ideal for people who have privacy concerns about being tracked.

Frequently asked questions