Jane Dotson
Annual mileage is a key factor that insurance companies use to assess risk and set insurance rates. The more miles a driver spends on the road, the higher the risk of being involved in a car crash, and the higher the insurance premium. The opposite is also true: the fewer miles a driver spends on the road, the lower the risk of a collision, and the lower the insurance premium. However, the impact of annual mileage on insurance rates varies among insurance providers, and insurers also take other factors into account when setting rates, such as age, gender, driving record, and location.
| Characteristics | Values |
|---|---|
| Annual mileage affects insurance rates | Yes |
| Average annual mileage | 13,476 miles |
| Average annual mileage for men | 15,291 miles |
| Average annual mileage for women | 8,883 miles |
| High annual mileage | 15,000-20,000 miles |
| Low annual mileage | 7,500 miles |
| Average insurance cost for 7,500 miles annually | $100/month |
| Average insurance cost for 15,000 miles annually | $140/month |
| Average insurance cost for 7,500 miles annually (full coverage) | $2,015/year |
| Average insurance cost for 7,500-9,999 miles annually (full coverage) | $2,100/year |
| Average insurance cost for 10,000-11,999 miles annually (full coverage) | $2,138/year |
| Average insurance cost for 12,000-14,999 miles annually (full coverage) | $2,237/year |
| Average insurance savings for <5,000 miles annually | $750 |
| Average insurance savings for 7,500 miles annually | $86/year |
| Average insurance savings for 7,500 miles annually | 10% |
| Average insurance savings for <7,000 miles annually | 5%-36% |
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What You'll Learn
Low mileage discounts
Annual mileage is a key factor that insurance companies use to assess a driver's risk and set insurance rates. The more miles a driver spends on the road, the higher the risk of being involved in a car crash. Therefore, drivers who drive fewer miles annually are likely to pay lower insurance rates.
Many insurance companies offer low-mileage discounts for policyholders who drive less than a certain number of miles per year. The qualifying requirements and discounts can vary, so it is best to speak to an agent or customer service representative to learn more. Some insurers require that you drive less than 10,000 miles to qualify for low mileage, and they wait to hand out bigger discounts until you are under that number of annual miles. Some insurers offer larger discounts if you drive fewer than 7,000 or 5,000 miles a year.
Pay-per-mile Insurance
Pay-per-mile insurance, also called pay-as-you-go or pay-as-you-drive car insurance, allows you to pay for your policy based on how much you drive. You typically pay a monthly base rate plus an additional fee per mile you drive. Some policies cap the number of miles you pay for, so any mileage you drive over that limit is free. This could be helpful if you don't drive a lot but want to take a road trip. These policies typically offer the same coverage options as a regular policy. Some major insurers offer pay-per-mile insurance, while some companies strictly sell only this type of policy.
Usage-based Insurance
Usage-based insurance (UBI) is an option for low-mileage drivers, as it matches rates to driving habits. If you are comfortable with your driving habits being monitored, a UBI company might be worth considering. However, if privacy is a concern, a low-mileage discount from a traditional insurance company could be a better fit.
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Mileage-based insurance programs
Insurance companies use different methods to track a driver's mileage, including through a device installed in the car's diagnostic port, or an app on the driver's phone. Some companies ask the driver to take a photo of their odometer, or request an odometer reading at the beginning and end of the policy term. Other methods include insurance photo inspection sites, such as CARCO, and other service records.
Some insurance companies offer discounts for low mileage, with some requiring drivers to travel under 10,000 miles per year to qualify for these discounts. Other companies have different thresholds for high mileage, which can affect the rate increase.
It's important to note that each insurer has its own criteria for setting rates, and the impact of annual mileage on insurance rates can vary. Mileage-based insurance programs may not be the best option for those who know they will be driving less only temporarily.
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How insurance companies track mileage
Annual mileage is a key factor in how insurance companies determine risk and set insurance rates. The more miles driven, the higher the risk of being involved in an accident, and the higher the insurance premium will be.
When applying for coverage, drivers will be asked to estimate their annual mileage. Insurance companies will then use various methods to determine the accuracy of this estimate, including requesting odometer readings or through telematics programs. Some insurers require drivers to install tracking devices in their cars, which automatically record mileage data and transmit it to an insurance app. Other methods include tapping into state or national databases, although this data may be inaccurate. In the US, California law requires carriers to collect annual mileage readings from drivers every three years.
Insurance companies also have other ways to determine a driver's mileage. Repair shops record mileage when a car is brought in for an oil change or repair, and this information can be accessed by insurers. Mileage is also recorded when a car undergoes a smog check or MOT.
Drivers enrolled in a telematics or pay-per-mile car insurance program will have their annual mileage automatically tracked through a mobile app or device provided by the carrier.
It is important for drivers to provide accurate and up-to-date mileage information to their insurance company. This can help to lower premiums and qualify for low-mileage discounts. Drivers have the right to challenge any mileage determined by the company and provide their own odometer reading.
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Mileage thresholds for high mileage
Mileage is a key factor that insurance companies consider when assessing risk and setting insurance rates. The more miles driven, the higher the risk of accidents and damage, leading to higher insurance premiums. However, insurance companies have different thresholds for high mileage, and rates may vary based on state, vehicle usage, and insurance carrier.
According to Insure.com, a policy with 20,000 miles or more driven annually is 36% more expensive than driving 5,000 miles or less per year. Some insurers offer discounts for driving fewer than 10,000, 7,000, or 5,000 miles annually. These thresholds vary among insurance providers, and rates are determined by each company's algorithms and state regulations.
The impact of mileage on insurance rates is also influenced by other factors, such as the type of vehicle, its maintenance history, and brand reputation. For example, gasoline engines are typically considered high mileage after 200,000 kilometers (124,000 miles), while diesel engines can last over 300,000 kilometers (186,000 miles). Additionally, certain car brands, such as Toyota and Honda, are known for their reliability even at higher mileage.
When considering purchasing a high-mileage car, it is essential to examine the service history and overall condition. A well-maintained vehicle with a complete maintenance history can be a better investment than a lower-mileage car that has been neglected. Furthermore, some buyers feel more confident purchasing a car with higher mileage, assuming that any potential issues have already been addressed.
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![Dome Auto Mileage Log, Undated, 32 Forms [Set of 3]](https://m.media-amazon.com/images/I/91tXadNGiVL._AC_UL320_.jpg)
Other factors affecting insurance rates
Yes, annual mileage does determine insurance rates. The more miles driven, the higher the insurance rates. This is because the more time spent on the road, the higher the risk of being involved in an accident.
Age
Age is one of the biggest factors affecting insurance rates, especially for younger drivers. Teen drivers are considered high-risk due to data showing they engage in riskier driving behaviours and have higher accident rates than other age groups. As drivers gain more experience, their premiums gradually decrease, with the most affordable rates usually seen in drivers in their mid-50s. Insurance rates then begin to rise again for older drivers aged 70 and above.
Vehicle type
The type of vehicle being insured also affects insurance rates. Luxury cars and sports cars typically have higher premiums due to expensive repairs and higher replacement costs. Insurers also consider theft risk, safety features, and repair costs. Vehicles with strong safety ratings may qualify for discounts, while those prone to inflicting more damage on other vehicles in an accident may be charged higher rates for liability insurance.
Location
Urban drivers pay higher insurance prices than those in small towns or rural areas due to higher rates of vandalism, theft, and accidents. Where a car is parked (on the street or in a secure garage) and anti-theft features may also impact insurance rates.
Driving experience and history
Insurance companies use a driver's past as a predictor of future risk. Tickets, violations, and past claims can significantly increase premiums.
Credit history
An individual's credit history is also a factor in insurance rates. An individual's credit-based insurance score is a statistical tool that predicts the likelihood of filing an insurance claim and the likely cost of that claim.
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Frequently asked questions
Yes, annual mileage is a factor in determining insurance rates. The more miles driven, the higher the insurance rate.
Insurance companies use various methods to determine annual mileage, including requesting odometer readings, annual mileage request forms, telematics programs, and photo inspections.
Insurers generally consider annual mileage of 15,000 miles or more as high mileage. However, this may vary depending on the insurance company and state regulations.
You can consider usage-based insurance (UBI) programs that focus on driving habits rather than mileage alone. Some insurers also offer pay-per-mile insurance, which can be cost-effective for low-mileage drivers.
According to the Federal Highway Administration (FHA), the average American drives approximately 13,476 miles per year. Male drivers average 5,400 more miles per year than female drivers, and drivers aged 35-54 have the highest annual mileage.
