Orlando Harmon
Auto insurance companies use annual mileage to determine risk levels and set rates. Generally, the more you drive, the higher your insurance premium will be, as you are statistically more likely to have an accident. Insurance companies often ask for an estimated annual mileage when you buy a policy, and some may track your mileage with an app or device. Providing accurate details ensures you do not pay more than necessary, although insurers will consider other factors, such as age, credit history, and driving record.
| Characteristics | Values |
|---|---|
| Mileage's impact on insurance rates | The more miles driven, the higher the insurance rates |
| Reason | Higher mileage = higher chance of accidents |
| Average annual mileage | 13,000-13,500 miles |
| Low-mileage threshold | ><co: 0,1,2,3,5>7,500-10,000 miles |
| Average-mileage range | 7,500-15,000 miles |
| High-mileage threshold | >15,000 miles |
| Mileage estimation methods | Service records, odometer/trip meter, fuel-based calculation, MOT history |
| Impact of underestimating mileage | Claim rejection, higher premiums, policy cancellation |
| Impact of overestimating mileage | Higher premiums than expected |
| Mileage-based insurance options | Pay-per-mile, limited-mileage, classic car insurance |
What You'll Learn
How mileage impacts insurance rates
Mileage is one of the factors that auto insurance companies use to set your premiums. The more you drive, the more likely you are to be involved in an accident, and the higher your insurance costs will be.
The average American drives about 13,500 miles annually, according to the Department of Transportation. Each insurance company sets its own standards for low, average, or high mileage. However, driving less than 10,000 miles annually is generally considered low mileage, and driving 15,000 miles or more is considered high mileage.
If you drive under 7,500 miles per year, you fall into the low-mileage category, which is the cheapest insurance bracket. Average mileage is considered 7,500-15,000 miles per year, and high mileage is over 15,000 miles per year. The higher the mileage, the more expensive the insurance policy.
In most states, annual mileage is not a major consideration in setting insurance rates. Policyholders driving 30,000 miles per year paid just 1-3% more on average than those driving 10,000 miles per year. However, in California, insurers can weigh mileage as one of the top three factors in determining premiums, along with driving record and years of driving experience. As a result, drivers in California who log 30,000 miles per year pay around 30% more than those driving 10,000 miles or less.
If you want to save on auto insurance, reducing your annual mileage may help. You can also consider purchasing a telematics or pay-per-mile car insurance policy, which adjusts your monthly costs based on the miles you drive. Limited-mileage policies are another option for those who don't drive much in a year.
It's important to provide accurate mileage information to your insurance company. Underestimating your mileage may result in a rejected claim, while overestimating may lead to higher premiums than necessary.
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How to calculate your current mileage
To calculate your current mileage, you can use one of several methods. The most common approach is to refer to your car's official service records. If you don't have access to these records, you can contact your mechanic, as they usually keep duplicates of vehicle service histories.
Another way to estimate your mileage is by performing the following steps:
- Fill your fuel tank completely until the dispenser automatically stops.
- Find the trip meter and reset it to zero.
- Maintain the speed limit to avoid excessive fuel consumption, which may impact the accuracy of your estimate.
- Drive until your fuel tank is almost empty, which may take a few days or weeks depending on your driving habits.
- Calculate your car's mileage by dividing the miles covered (based on the trip meter reading) by the amount of fuel used.
You can repeat the process a few times to get a more precise estimate. Additionally, you can refer to your car's odometer reading, which measures the total distance travelled by your vehicle.
It's important to note that insurance companies often request mileage information when you apply for or renew your auto insurance. They may also track your mileage using an app or device. Providing accurate mileage details ensures that you don't pay more than necessary for your insurance coverage.
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How to get low-mileage insurance
Low-mileage insurance is a great way to save money on your car insurance, especially if you don't drive very often. Here are some steps you can take to get low-mileage insurance:
Understand the Factors That Affect Your Insurance Rates
Firstly, it's important to know that insurance companies take various factors into account when determining your rates. While annual mileage is one of them, it's not the only factor. Other factors include:
- Your age
- Your credit history
- Your driving record
- Your location
- The type of vehicle you drive
- The amount of coverage you purchase
- Your deductible
Calculate Your Current Mileage
Before looking for low-mileage insurance, it's a good idea to calculate your current annual mileage. You can do this by resetting your trip meter and multiplying the obtained odometer value by 52 to get your current annual average mileage.
Shop Around for Insurance Providers
Not all insurance companies offer low-mileage insurance, so you'll need to do some research to find the ones that do. Some companies that offer low-mileage insurance include:
- State Farm
- Safeco
- GEICO
- USAA
- Metromile
- Mile Auto
- Allstate
- Nationwide
- Root
- Lemonade
Contact Your Chosen Insurance Company
Once you've found a few insurance companies that offer low-mileage insurance, contact them to get quotes and find out their specific requirements for qualifying as a low-mileage driver. Most companies require you to drive fewer than 7,500 miles per year, but this may vary.
Provide Proof of Your Mileage
To qualify for and maintain your low-mileage insurance status, you will need to provide proof of your annual mileage. This can be done by submitting pictures of your odometer readings or through verification from a third party.
Take Advantage of Other Discounts
In addition to low-mileage discounts, insurance companies offer various other discounts that you may be eligible for, such as good student discounts and safe driver discounts. Be sure to ask about these when contacting insurance providers.
By following these steps, you can save money on your car insurance by taking advantage of low-mileage insurance offerings.
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Why you should update your insurer with your mileage
Updating your insurer with your mileage is important as it can affect your insurance premium. Insurers use your annual mileage to estimate your insurance premium. The more you drive, the higher your premium will be. This is because the more time you spend on the road, the more likely you are to be involved in an accident.
It could save you money
If your insurer thinks you are driving more than you actually are, you may be missing out on lower rates. Insurers offer discounts to drivers who log a lower-than-average number of miles per year. Updating your mileage can help you qualify for these discounts.
It could be considered fraud to report incorrect mileage
If you under-report your mileage, your insurance company might view that as a form of fraud. When you're putting in more miles than you're telling your insurer, you run a greater risk of getting into an accident. Under-reporting your mileage means your insurer lacks the proper data to set your rates and may be undercharging you.
Frequent mileage updates are required with certain types of coverage
In some states, drivers can purchase pay-per-mile insurance. The cost of insurance then varies from month to month based on how many miles you drive. Insurers offering this type of coverage normally capture your mileage by using in-car tracking devices.
To avoid invalidating your policy
If you go over your annual mileage, your insurer could invalidate your policy. This means they won't pay out if you need to make a claim. This is because car insurance policies will only cover you for the annual mileage estimate you gave. Any journeys outside of this are not insured.
To avoid paying more than you need to
If your insurer thinks you are driving less than you actually are, you may be paying more than you need to. Updating your mileage can help you avoid this.
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How insurers collect your mileage data
Auto insurers collect your mileage data in several ways. These include:
Self-reporting
Insurers may ask you to self-report your odometer reading. However, they may have no way to verify the accuracy of this information.
Technology
Some insurers use tracking devices that record and transmit mileage data. These devices can be plugged into a port in your car or downloaded as a smartphone app. They monitor your speed, acceleration, braking, distance driven, and other details, and send this information to the insurer.
Databases
Insurers may also obtain mileage information from state or national databases, such as DMV records or data from repair shops and car dealers. However, this data may not always be accurate or reflect your specific mileage.
Pay-per-mile insurance
In some states, insurers offer pay-per-mile insurance, where the cost of insurance varies based on monthly mileage. These programs typically use in-car tracking devices to capture mileage data.
Odometer readings
Insurance companies may request odometer readings or estimates of annual mileage when you apply for insurance or during the renewal process. They may also obtain odometer readings from third parties, such as repair shops or dealerships.
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Frequently asked questions
The more miles you cover, the higher your premium will be. This is because the more you drive, the more likely you are to be involved in an accident and need to file an insurance claim.
Insurance companies ask about your annual mileage because it helps them determine how much of a risk you pose as a driver. The more miles you drive, the more likely you are to get into an accident.
Insurance companies verify your mileage in several ways, including self-reporting, technology, and databases. Self-reporting involves a driver providing a current odometer reading when asked by the insurer. Technology involves using tracking devices or smartphone apps to track driving habits and calculate mileage. Databases involve tapping into state or national databases to confirm vehicle mileage.
If you go over your annual mileage, your insurance policy could be invalidated, meaning the insurer won't pay out if you need to make a claim. In some cases, insurers will charge a lump sum to cover the difference between your current policy price and what you would have been charged if your mileage was correct.
To calculate your annual mileage, write down your odometer reading at the beginning and end of your policy term and subtract the first reading from the second one. You can also use an annual mileage calculator or refer to your vehicle's service history, where the service coordinator typically records your mileage when you bring it in for maintenance.
