Jeffrey Wade
Driving more miles increases the odds of being involved in an accident. This is why car insurance companies consider you a higher risk if you drive a lot of miles, and your rates will be higher. However, mileage is not the only factor that insurance companies consider when setting rates. Other factors include the type and model of vehicle, how much coverage you purchase, your deductible, your age, your gender, your driving record, and where you live.
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What You'll Learn
Mileage is a key factor in assessing risk and setting insurance rates
Insurers typically offer discounts to low-mileage drivers, usually defined as those who drive less than 7,000 or 10,000 miles per year. Driving 12,000 or fewer miles a year may earn you low-mileage insurance discounts. In general, you'll save the most if you drive less than 5,000 miles annually. According to Insure.com, someone who drives 10,000 miles annually will pay 4% less than someone who drives 12,000 miles. Driving 7,500 miles annually could reduce your premiums by 10% compared to driving 10,000 miles.
However, mileage is not the only factor that affects insurance rates. Other factors include the type and model of vehicle, the amount of coverage, your deductible, your age, gender, driving record, and where you live. For example, in densely populated areas, there is a higher chance of minor accidents. Additionally, insurance companies may also consider your driving behaviour, which can be tracked through usage-based insurance programs. These programs can provide reports on your driving behaviour and help insurers assess your risk level.
While mileage is a significant factor in determining insurance rates, it is important to note that it is not the sole determinant. Insurance companies consider a range of factors to assess risk and set insurance premiums accordingly.
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Higher mileage means higher insurance costs
Insurance companies use your annual mileage to set your premiums. The more miles you drive, the higher your insurance rate is likely to be. This is because the more time you spend on the road, the greater the odds of being involved in a collision.
Insurance companies may ask you to estimate your annual mileage when you apply for a policy. They may also send out annual mileage request forms every few years to track your true mileage. Some insurers will also check your MOT history, which includes your total mileage from the last three years.
The threshold for low mileage varies by insurer, but it is generally considered to be under 10,000 miles per year. Some sources suggest that low mileage is considered to be under 7,500 or 7,000 miles per year.
If you are a high-mileage driver, you may be able to reduce your insurance costs by switching to a usage-based insurance program, which tracks your mileage and driving behaviour. You could also consider pay-per-mile insurance, which calculates a base daily rate plus a per-mile charge.
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Mileage-based insurance companies
In the US, the average person drives 13,476 to 13,500 miles per year, according to the Federal Highway Administration (FHWA). If you drive less than this, you may be considered a low-mileage driver by some insurers. However, it's important to note that the definition of a low-mileage driver varies across insurance companies, with some setting the threshold at 7,500 miles per year.
Some mileage-based insurance companies offer pay-per-mile or pay-as-you-drive policies. With these, you pay a low monthly base rate and an additional fee for every mile driven. This type of policy may include a cap on the number of miles charged, so any mileage over that limit is free. However, it's important to be aware that driving more miles can increase your premium, as it indicates a higher risk of being involved in an accident.
It's worth noting that not all insurance companies weigh mileage as a primary factor in determining premiums. In the US, California is an exception, where state law allows insurers to consider mileage as one of the top three factors, along with driving record and experience. Therefore, it's essential to understand the regulations in your state and compare policies to find the best option for your driving habits.
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Discounts for low-mileage drivers
Mileage is one of the primary factors that insurance companies use to set your premiums. The more you drive, the more likely you are to be involved in an accident, so insurance companies consider you a higher risk and your rates will reflect this.
However, if you are a low-mileage driver, you can take advantage of various options when shopping for car insurance. Many companies offer low-mileage discounts, although the threshold for what counts as low mileage varies. Some companies consider anything under 12,000 miles per year to be low mileage, while others set the bar at 10,000 or even 5,000. Generally, most insurance providers consider someone who drives between 0 and 7,500 miles per year a "low-mileage driver".
If you are a low-mileage driver, you can find significant discounts with certain insurance companies. For example, USAA and State Farm offer the cheapest premiums for low-mileage drivers, according to The Zebra. Other companies that offer low-mileage discounts include:
- Allstate's Milewise
- Liberty Mutual's ByMile
- Safeco's RightTrack
- Metromile
- Nationwide's Smartmiles
- Mile Auto
Another way to get low-mileage auto insurance is to allow your coverage provider to monitor or track how much you drive per year. This is usually done using a telematics device that plugs into your vehicle or an app on your phone. Some companies that offer this service include:
- Hugo
- Root
- Liberty Mutual
- Safeco
- Metromile
- Nationwide
If you are a low-mileage driver, it is worth shopping around and comparing quotes from several providers to find the best discount for your needs.
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Ways to estimate your annual mileage
The number of miles you drive each year can affect the cost of your car insurance. The more you drive, the higher your insurance rate is likely to be. This is because the more time you spend on the road, the higher the chance you will be involved in an accident.
- Use a mileage calculator: Tools like the GoCompare mileage calculator can help you calculate your daily, weekly, and annual mileage. You can input the average number of miles you drive per day, and the calculator will give you an approximate number of miles for the year.
- Check your MOT certificate: Your MOT certificate includes your car's total mileage at the time of the MOT, as well as your mileage history over the last three years. By comparing the difference in total miles travelled each year, you can estimate your annual mileage. For example, if you drove 20,000 miles in the first year, 40,000 miles in the second year, and 60,000 miles in the third year, your annual mileage is roughly 20,000 miles.
- Keep a record of your daily/weekly mileage: Tracking the miles you cover on a typical day or week can help you estimate your annual mileage. You can use a conversion table to find the matching annual estimate for your daily or weekly mileage.
- Consider a usage-based insurance program: Many companies offer usage-based insurance programs that track your mileage and provide reports on your driving behaviour. This can be a convenient way to monitor your mileage and receive feedback on your driving habits.
- Estimate your mileage accurately: When providing an estimate of your annual mileage to insurance providers, be as accurate as possible. Overestimating your mileage may result in paying more than necessary, while underestimating or deliberately misleading your insurer can lead to issues with claims and policy cancellation.
- Reduce your mileage: If you want to lower your annual mileage, consider options such as working from home, carpooling, or using alternative transportation methods like biking. These choices can help reduce your overall mileage and may lead to savings on insurance and maintenance costs.
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Frequently asked questions
Yes, the more miles you drive, the higher your insurance rate is likely to be. This is because the more you drive, the greater the odds of being in an accident. However, mileage is just one of many factors that affect the cost of insurance.
Insurance companies often rely on the honour system, especially when you first sign up for a policy. However, they may send out annual mileage request forms every few years to track your true annual mileage. They may also get mileage updates through insurance photo inspection sites, service records, or MOT history.
Some insurance companies offer pay-as-you-drive or usage-based insurance plans, where your mileage determines your premium. You may also be able to save money by switching to an insurance company that uses different criteria for setting rates.
