Car insurance rates are based on a number of factors that are unique to every driver. Some common examples include state, age, credit score and claim history. However, your annual mileage—the distance you drive in a given year—can also impact the cost of your car insurance. If you drive infrequently, you might be able to get a cheaper rate.
Does annual mileage impact my car insurance rates?
Yes, your annual mileage does have an impact on your car insurance rate. Specifically, the less you drive, the less you may be able to pay for car insurance. When you apply for coverage, whether online or through an agent, you will be asked to estimate how many miles you drive on an annual basis. According to the Federal Highway Administration (FHA), the average American drives 13,476 per year.
The reason why estimated annual mileage on insurance policies affects your premium is because it predicts your risk of filing a claim. For instance, infrequent drivers often pay less for car insurance because there is a lower risk of them getting into an accident. On the other hand, if you drive 50 miles per day, your risk of a collision increases significantly.
You might be wondering how car insurance companies know how many miles you drive per year. Usually, they rely on the honor system. When you submit your policy application, do not lie about your annual mileage. Some insurance companies do random mileage checks during the year if your number is lower than average when you enroll.
When your policy is up for renewal, you have the opportunity to change your annual estimated mileage. If you are driving less because your circumstances have changed, contact your agent and give them an updated estimate. Your new mileage may help you get a lower premium based on the insurance company’s car insurance mileage brackets.
Another question on most car insurance applications is what type of driving you do—pleasure, business or commuting. If your car is primarily used for commuting back and forth to work, your insurance company will need to know, as it can impact your rate.
Drivers who travel far distances to work usually pay higher car insurance premiums than drivers who travel a few miles to work. Not only are those drivers spending more time on the road, but if they are commuting into a densely populated area or city, there could be a higher chance of an accident occurring.
Low mileage car insurance
If you drive infrequently, you may be a good candidate for low mileage car insurance. This type of car insurance works by tracking miles driven using a telematics device that gets installed in your vehicle, or through a smartphone app
While some car insurance companies offer mileage-based discounts, low mileage car insurance is available as either a standalone policy or a program you can enroll in through a standard auto insurance provider.
With low mileage car insurance, your premium is based on the number of miles you drive each month. Usually, you pay a flat monthly rate and a small per-mile-fee. Oftentimes, low mileage auto insurance is less expensive than traditional car insurance.
Here are some of the major companies that offer low mileage car insurance and mileage-based savings programs:
- Mile Auto
- Nationwide (SmartMiles program)
- Progressive (Snapshot program)
- Allstate (Milewise program)
- State Farm (Drive Safe and Save program)
- Farmers (Signal program)
- Geico (DriveEasy program)
Will low mileage auto insurance help me save?
If you qualify for low mileage insurance, it may help you get a much lower premium, especially if you are able to take advantage of additional discounts. However, a cheaper rate is not guaranteed. Only certain drivers will benefit from low mileage car insurance.
Drivers who travel a normal distance—like commuting daily to work or school—should avoid low-mileage car insurance. Keep in mind that there is a flat monthly rate, plus a per-mile fee. If you are driving often, the per-mile fee can add up, making the price as expensive or more expensive than a regular car insurance policy.
Other ways to save on car insurance
There are many ways to save money on car insurance. The number of miles you travel is just one of them. Here are some additional ways that drivers may be able to get a lower car insurance premium, regardless of mileage:
- Look for discounts: Most car insurance companies offer discounts, like bundling policies and being a good student, that may help you get a lower rate.
- Improve your credit score: Drivers with a good credit score pay the lowest rates. Improving your credit can be an effective way to get a cheaper premium. (Please note that California, Hawaii, Massachusetts, Michigan and Washington prohibit the use of credit in determining auto insurance rates.)
- Pay in full: If you can afford to pay your annual premium upfront and in full, rather than in monthly installments, you can probably save some money.
- Take a defensive driver course: Drivers who complete an approved defensive driver or safe driver training course may qualify for a discount on their policy.
- Raise your deductible: The higher your deductible is, the lower your rate will be. Increasing your deductible can help you save money, just be sure you can afford the higher out-of-pocket cost in the event of a claim.
Frequently asked questions
What is the best car insurance company?
The best car insurance company varies. It depends on where you live, how much coverage you need, the type of coverage you need and your budget. Some of Bankrate’s highest rated companies are USAA, Amica, State Farm, Progressive and The Hartford based on rates from Quadrant Information Services, third-party ratings, available coverages and available discounts.
What is the average cost of car insurance?
In the United States, the average cost of car insurance is $1,674 per year for a full coverage policy. However, keep in mind that you could pay more or less based on individual factors, like your state, age, your annual mileage and the type of car you drive.
Is car insurance required for infrequent drivers?
Yes, car insurance is required in almost every state, regardless of how often or how far you drive. If your vehicle is registered, you must carry a minimum amount of car insurance.
Do I need a smartphone to get low mileage car insurance?
In order to get low mileage car insurance, you probably need a mobile device. Many providers require you to download a mobile app and keep your phone in the vehicle to track your mileage during trips. As an alternative, some providers will send you a physical telematics tracking device that plugs into your car, and does not require a smartphone.