Auto Mileage: Insurance Company's Right To Know?

The number of miles driven annually is a key factor in determining car insurance rates. Insurance companies use this information to set premiums, with higher mileage resulting in higher insurance costs. While insurers often request an estimated annual mileage when a policy is purchased, they also have various methods to determine actual mileage, including odometer readings, repair shop records, and DMV data. In some cases, insurers can adjust rates or invalidate policies if the reported mileage is significantly different from the actual mileage. It is important for policyholders to provide accurate mileage information and stay within their estimated mileage to maintain valid insurance coverage.

Insurers can obtain your mileage without your knowledge

It is not mandatory to provide your auto mileage to your insurance company. However, they will likely ask for an estimated annual mileage when you buy a policy to get an idea of how much you'll be driving. This is because the more you drive, the more likely you are to get into an accident and make a claim. So, the number of miles you put on your car directly influences your insurance rate.

• Telematics: By installing telematics devices in your car, they can track the miles you cover.
• Manual checks: An agent from the company might visit your home at regular intervals to check the reading of the odometer.
• Third-party sources: The company can connect with a third-party auto repair shop or another source, such as DMV records, that can provide the odometer reading.

For example, Nathaniel Epting, a customer of CSAA auto insurance, discovered that his insurance company had obtained his mileage information without his knowledge. His insurance premium increased by almost a third, and when he enquired about it, he found out that his "future annual miles" had been estimated to be more than four times higher than the previous year. The insurance agent informed him that they had obtained the information from sources like oil changes and repairs.

While insurers can obtain your mileage without your knowledge, you have the right to challenge any mileage determined by the company. You can do this by contacting your agent or insurance company and providing your odometer reading and your estimated mileage for the upcoming year.

High mileage can invalidate your insurance

It is not mandatory to provide your auto mileage to your insurance company, but they may be able to find out anyway. Insurance companies can determine your mileage in several ways, including:

• Telematics devices installed in your car
• Manual checks by an agent from the company
• Third-party auto repair shops that provide odometer readings
• Information from when your car is in the shop for repairs or maintenance
• Government sources, such as DMV records of your smog check

Insurance companies use your annual mileage to calculate your insurance rate, with higher mileage resulting in a higher rate. This is because driving more miles increases the chances of getting into an accident and making a claim. Therefore, underestimating your mileage could lead to problems. If your mileage is higher than estimated, your insurer may invalidate your policy, meaning they will not pay out if you need to make a claim. They may also charge a lump sum to cover the difference between your current policy price and what you would have been charged with the correct mileage.

To avoid these issues, it is important to provide an accurate estimate of your annual mileage to your insurer and update them if you go over or expect to go over your estimated mileage before your policy ends. While it may result in a higher insurance rate, it is better to be honest about your mileage to ensure that you have valid insurance coverage.

In addition to mileage, other factors that insurance companies consider when calculating your rate include your job, address, driving habits, and the class of use of your vehicle. It is important to keep your insurer updated on any changes in these areas as well to ensure that your policy remains valid.

Insurers may offer lower rates for low-mileage drivers

While it is not mandatory to provide your auto mileage to your insurance company, doing so can have its benefits. Insurers may offer lower rates for low-mileage drivers, and there are a few ways to go about finding these discounts.

Firstly, it is important to note that the definition of a "low-mileage driver" varies across insurance providers. While some companies consider driving under 7,500 miles per year as low mileage, others may set the threshold at 10,000 or 12,000 miles annually. It is crucial to understand your insurance provider's definition to determine your eligibility for any low-mileage discounts.

One way to take advantage of low-mileage rates is to look for insurance companies that offer pay-per-mile or usage-based insurance (UBI) programs. These policies typically involve a base rate, which is then adjusted based on your actual mileage and driving behaviour. For example, Allstate's Milewise program and Nationwide's SmartMiles plan are designed for low-mileage drivers.

Another option is to seek out insurance providers that offer specific low-mileage discounts. For instance, USAA and American Family offer reduced rates for drivers who meet certain mileage thresholds.

Additionally, some insurance companies provide telematics apps that track your driving behaviour and offer usage-based discounts. These apps may monitor factors such as mileage, phone use while driving, braking habits, and speeding. However, it is important to note that your rates could increase if your driving score is low.

By comparing quotes from different insurance companies and exploring the options mentioned above, low-mileage drivers can find the best rates and save money on their car insurance.

How to calculate your annual mileage

While it is unclear whether providing auto mileage to an insurance company is mandatory, insurance companies do use annual mileage to calculate insurance costs. Therefore, it is important to know how to calculate your annual mileage accurately.

Firstly, it is important to note that annual mileage includes all trips made in your car. If you have a named driver on your policy, you must calculate how much they are likely to drive and add that to your total.

There are several methods to calculate your annual mileage. One way is to keep track of your odometer. You can then compare the miles covered in a day or week to an annual mileage conversion table. Alternatively, you can use your MOT certificates to compare the mileage recorded between the last two services to calculate the annual figures.

If you have bought your car brand new, you can check your current odometer reading and divide it by the total number of years you have had your car. For example, if your car is three years old, divide your current odometer reading by three to get your annual mileage.

You can also calculate your annual mileage by checking your previous vehicle maintenance and service records. Compare your vehicle's mileage during an oil change to today's mileage. For example, if your current odometer reading is 10,000 miles and your old odometer reading from an oil change a year ago was 5,000 miles, then your annual mileage is 5,000 miles.

Another way to calculate your annual mileage is to calculate your commute and weekend mileage. First, multiply your commute to work (both ways) by the number of days you commute in a week. Then, add your weekend mileage to your commute mileage to get your total mileage per week. Finally, multiply your weekly mileage by 52 (the number of weeks in a year) to get your annual mileage.

It is important to be as accurate as possible when calculating your annual mileage to avoid paying more for your insurance. Overestimating your annual mileage may result in a higher insurance premium, while intentionally underestimating your mileage to get a cheaper policy could have serious consequences if your insurance company finds out. They may cancel your policy, making it difficult to find a new one in the future. Therefore, it is crucial to think carefully about where you drive your car and the distances you travel.

Ways to save on car insurance

While it is not strictly mandatory to provide your auto mileage to your insurance company, they may be able to obtain this information without your knowledge. Under certain circumstances, insurers have the legal right to determine how much a policyholder drives. This can be done by obtaining information from repair shops when your car is in the shop, or from DMV records of your smog check. This information is used to calculate your insurance costs, as drivers who cover more miles annually are more likely to get into accidents and file insurance claims.

• Shop around for insurance: Compare rates from different companies, as prices differ from company to company. Get at least three quotes from different insurance companies and types of insurance companies.
• Compare insurance costs before buying a car: Auto insurance premiums are based in part on the car's price, the cost to repair it, its safety record, and the likelihood of theft. Many insurers offer discounts for features that reduce the risk of theft or personal injuries, or for cars that are known to be safe.
• Raise your deductible: By choosing a higher deductible on your car insurance, you can significantly lower your premium costs. Just make sure you have enough money set aside to pay the higher deductible in case of a claim.
• Reduce optional insurance on older cars: If your older car is worth less than 10 times the insurance premium, having collision and/or comprehensive coverage may not be cost-effective. Check the value of your car on websites like Kelley Blue Book, National Association of Auto Dealers (NADA), or TrueCar.
• Bundle your insurance: Many insurers will give you a discount if you purchase multiple types of insurance from them, such as homeowners and auto insurance, or if you insure more than one vehicle with them.
• Maintain a good credit history: Establishing a solid credit history can lower your insurance costs. Many insurers use credit information to price auto insurance policies, as research shows that people who effectively manage their credit make fewer claims.
• Take advantage of low-mileage discounts: Some companies offer discounts to motorists who drive less than the average number of miles per year. If your annual mileage has decreased due to working from home or other factors, you may qualify for lower premiums.
• Ask about group insurance: Some companies offer reductions to drivers who get insurance through a group plan from their employers, professional or alumni groups, or other associations.
• Seek out other discounts: There are various other discounts that your insurer may offer. For example, some companies offer discounts to drivers who have taken a defensive driving course, have a good student on their policy, or have been accident-free for a specified period.

Frequently asked questions