Paul Sanchez
The number of miles driven annually directly impacts car insurance rates. Insurance companies use annual mileage to calculate insurance costs, with higher mileage resulting in higher insurance rates. This is because the more time spent on the road, the higher the risk of accidents and claims. Drivers with lower annual mileage typically benefit from lower insurance rates. While each insurance company has its own criteria for setting rates, it is important to accurately estimate annual mileage to avoid issues with insurance coverage.
| Characteristics | Values |
|---|---|
| Average annual miles driven by Americans | 13,000+ |
| Average annual miles driven by US drivers | 13,476 |
| Average daily miles driven | 37 |
| Annual mileage considered high by insurance companies | 15,000+ |
| Annual mileage considered low by insurance companies | 20 daily |
| Mileage impact on insurance rates | Higher mileage = higher insurance rates |
| Mileage impact on insurance premiums | Higher mileage = higher insurance premiums |
| Mileage impact on insurance claims | Higher mileage = more insurance claims |
| Mileage impact on insurance policy | Higher mileage = more expensive policy |
| Mileage tracking methods | Telematics device, smartphone app, manual odometer reading, third-party auto repair shop |
| Mileage estimation | Insurers ask for an estimate when applying for insurance |
| Mileage adjustment | Notify insurer if you go over your annual mileage; they may charge an adjustment fee |
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What You'll Learn
Annual mileage and insurance cost
Annual mileage plays a significant role in calculating insurance costs. The more you drive, the higher your insurance rate is likely to be. This is because the number of miles you drive predicts the risk of you filing a claim. For example, a Verisk analysis found that vehicles driven less than 3,000 miles annually are involved in 40% fewer claims. On the other hand, cars driven 20,000 miles or more annually record 31% more claims. Insurers will likely charge higher premiums to drivers who log more miles because, as you spend more time on the road, the odds of being involved in an accident increase.
The average annual mileage driven in the US is 13,476 miles, according to 2022 data from the Federal Highway Administration (FHA). However, this number varies depending on factors such as age, occupation, gender, and location. For instance, male drivers average over 5,400 more miles per year than female drivers, and drivers between the ages of 35 and 54 have the highest rate of annual mileage per year at 15,291 miles.
When applying for car insurance, you will be asked to provide an estimate of your annual mileage. It is important to be as accurate as possible, as going well over your estimated annual mileage could invalidate your policy. Some insurers verify mileage during the year, and others track your mileage directly through pay-as-you-drive or usage-based insurance programs. If your annual mileage is too low, your policy could be invalidated, and you may not be able to make a claim.
If you drive infrequently, you may be a good candidate for low-mileage car insurance. This type of insurance tracks your miles driven using a telematics device installed in your vehicle or through a smartphone app. With low-mileage car insurance, you usually pay a flat monthly rate and a small per-mile fee, which is often less expensive than traditional car insurance.
It is worth noting that each car insurance company has its own criteria for setting rates, and not all insurers rate high mileage the same. While some insurers consider mileage above 20,000 miles to be high, others have a threshold of 15,000 miles. Therefore, it is important to shop around and compare rates from different insurance companies to find the best policy for your needs.
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Low-mileage insurance
The number of miles you drive annually impacts your car insurance rates. The more you drive, the higher your insurance policy will be. This is because the more time you spend on the road, the higher your chances of getting into an accident.
According to the Federal Highway Administration (FHWA), the average number of miles driven annually in the US is 13,476. If you drive less than this, you may be considered a low-mileage driver. However, insurance companies have different definitions of the mileage threshold.
If you are a low-mileage driver, you may be able to save money on your insurance with discounts, pay-per-mile policies, or usage-based insurance. With pay-per-mile insurance, you pay a flat monthly rate and a small per-mile fee. Usage-based insurance (UBI) tracks your driving habits and/or mileage and may offer you a discount if you are a safe driver. However, some companies may increase your rate if they detect risky driving behaviours.
You can calculate your estimated annual mileage by tracking your mileage for a month and multiplying it by 12, or by checking your mechanic or MOT records. When applying for insurance, you will be asked to provide an estimate of your annual mileage. It is important to be accurate with this estimate, as providing a deliberately low estimate could invalidate your policy and make it difficult to get car cover in the future. If your mileage changes, you should update your insurance provider.
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Tracking mileage
There are several ways to track your mileage. Firstly, your MOT certificate will show your total mileage and mileage history over the last three years, giving you an idea of your annual mileage. Secondly, some insurance companies may send an agent to your home to check your odometer reading, or they may connect with a third-party auto repair shop to provide this information.
If you are on a low-mileage insurance plan, your insurer may track your mileage using a telematics device installed in your vehicle or through a smartphone app. This type of insurance, also known as pay-per-mile insurance, bases your premium on the number of miles you drive each month. You usually pay a flat monthly rate and a small per-mile fee.
It is important to accurately estimate your annual mileage when applying for insurance. Underestimating your mileage to get a cheaper policy is not advisable, as your insurer may invalidate your policy if they can prove you lied. Similarly, going over your estimated annual mileage could also invalidate your policy, as your insurer may refuse to pay out if you need to make a claim. Therefore, it is crucial to inform your insurer if you go over your annual mileage or think you might before your policy ends. They may charge an adjustment fee to update your details, and your premium may increase to reflect the additional miles.
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Estimating mileage
Estimating your annual mileage is an important step in the process of buying car insurance. The number of miles you drive in a year is a significant factor in determining your insurance costs. Insurance companies use your annual mileage to calculate your insurance rates, with higher mileage resulting in higher insurance premiums. Therefore, it is crucial to provide an accurate estimate of your expected annual mileage when purchasing a policy.
There are several methods to estimate your annual mileage. One approach is to refer to your MOT certificate, which includes your car's total mileage and mileage history over the last three years. By comparing the difference in total miles travelled each year, you can estimate your average annual mileage. For instance, if your car's mileage increased by 20,000 miles over three years, you can estimate that you drive approximately 20,000 miles per year.
Another method is to calculate your average daily or weekly mileage and use a conversion table to determine the corresponding annual estimate. You can note down the number of miles you expect to drive each day or week and find the matching annual estimate in the conversion table provided by your insurance company. This approach helps you estimate your annual mileage more precisely, taking into account any fluctuations in your driving habits throughout the year.
Additionally, some insurance companies offer low-mileage car insurance plans, which are ideal for those who drive infrequently. These plans typically involve tracking your mileage using a telematics device installed in your vehicle or through a smartphone app. Your premium is then calculated based on the number of miles you drive each month, with a flat monthly rate and an additional per-mile fee. Such plans are often more affordable than traditional insurance policies and are suitable for those who drive less than 20 miles per day or 7,500 miles annually.
While it may be tempting to underestimate your annual mileage to obtain a cheaper policy, it is essential to be honest and accurate. Providing misleading information about your mileage could invalidate your policy, making it difficult to find insurance in the future. If your circumstances change, and you exceed your estimated annual mileage, remember to inform your insurer promptly to avoid any issues with your coverage.
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Going over your mileage
If you go over your annual mileage, or think you might before your policy ends, it is important to inform your insurer. They may charge you an "adjustment fee" to update your details, and your premium is likely to increase to reflect the additional miles you need insurance for. If your premium becomes too expensive, it may be worth considering cancelling your policy and buying one with higher mileage. However, insurers often charge a cancellation fee, so you should weigh this up against any savings you might make by switching to a new policy.
If you do not inform your insurer and your policy is invalidated, you may find it difficult to get car cover in the future. The policies available to you are likely to be very expensive, and you will generally have to pay a higher premium for a higher estimated mileage.
There are several ways to track a driver's mileage. Some insurance companies offer low-mileage car insurance, which tracks miles driven using a telematics device installed in the vehicle or through a smartphone app. This type of insurance is usually less expensive than traditional insurance, as it involves paying a flat monthly rate and a small per-mile fee. Some insurers may also verify your mileage during the year by visiting your home to check the reading of the odometer, or by connecting with a third-party auto repair shop in your area.
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Frequently asked questions
Yes, the number of miles driven annually directly affects car insurance rates. The more miles driven, the higher the insurance rates.
Insurance companies can calculate the annual mileage of a car through telematics, manual checking, or third-party auto repair shops. Telematics involves installing a device in the car to track the miles covered. Alternatively, an agent from the company may visit to check the odometer reading, or they may obtain this information from a third-party auto repair shop.
If you exceed your annual mileage estimate, you must inform your insurance company. They may charge an "adjustment fee" to update your details, and your policy cost may increase to reflect the additional miles driven. In some cases, going over your annual mileage could invalidate your policy, meaning your insurer may not pay out if you need to make a claim.
