Car insurance for low-mileage drivers

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Changing driving habits in the U.S. have caused insurance companies to adapt their approach to car insurance. On average, the typical driver puts nearly 13,500 miles per year on their car, but some people may find themselves driving less than that. Some of the best car insurance companies have adapted and created products specifically for infrequent drivers.

Each insurance company has its own definition of a low-mileage driver and adjusts its programs and discounts for this driver group accordingly. So whether you work from home, are shifting to public or alternate modes of transportations, or just find yourself behind the wheel less, exploring the offerings of non-traditional car insurance policies might help give an idea of how much you could save on car insurance.

Who is a low-mileage driver?

According to the Federal Highway Administration, Americans drove an average of 13,476 miles annually in 2018. While some insurers consider anyone driving less than this average distance per year to be a low-mileage driver, others are more limited in their definition. For example, MileAuto, a mileage-based insurer, states on its site that anyone who drives less than 10,000 miles a year fits in this category and “is probably paying too much for car insurance.” Nationwide puts the low mileage threshold at 8,000 miles annually.

In fact, although the overall driving rate in this country does not appear to be declining dramatically, it is clear that certain groups are increasingly finding alternatives to frequent driving. These include the growing number of remote workers, urban dwellers who rely more on ridesharing services, stay-at-home parents and retirees. Depending upon actual mileage driven annually, members of these groups may benefit substantially with a mileage-based premium policy. Keep in mind that actual rates may vary, and will depend on your true mileage, the insurance company chosen, the specifics of your low-mileage driving policy and discounts, among other factors.

Car insurance for low-mileage drivers

As the chart below indicates, with traditional auto insurance, the annual mileage driven does not tend to impact annual premiums significantly. A driver who drives around 2,000 miles per year saves less than $200 annually compared with a high-mileage driver who drives 20,000 miles annually. For this reason, low-mileage car insurance is designed to provide more affordable options for the low-mileage driver based on their driving habits. With low-mileage insurance — or a pay-per-mile policy — drivers are more likely to see meaningful savings between mileage tiers.

Average full coverage premiums based on mileage

Annual mileage National average annual premium Average annual premium for males Average annual premium for females
2,000 $1,580 $1,583 $1,577
5,000 $1,612 $1,614 $1,610
12,000 $1,674 $1,648 $1,701
15,000 $1,712 $1,717 $1,708
20,000 $1,748 $1,751 $1,746

How to save on car insurance as a low-mileage driver

When it comes to car insurance for low-mileage drivers, most insurance companies have had available discounts options for some time. Car insurers assume that those who are on the roads less often will not be as likely to have accidents. This reduced risk is usually worth a discount. More recently, mileage and usage-based policies have been specifically created with low-mileage drivers in mind to benefit their infrequent driving and share special discounts.

Low-mileage drivers can save in a number of ways:

  • Low-mileage discounts – This is a traditional approach to reduce premiums by a percentage for driving less than a certain amount of miles. This is often based on the driver’s commitment to driving below a given threshold or annual mileage reporting.
  • Use-based discounts – This is a more recent technique to measure both mileage and safe drying habits telematically. For example, discounts may be based on driving during non-peak traffic hours, which are generally deemed safer, or by braking and accelerating gently.
  • Mileage-based policies – With this option, a driver’s miles can be measured with an app and premiums can be based on a modest base price plus an additional amount for every mile driven.

Car insurance companies for low-mileage drivers

If you consider yourself a low-mileage driver and do not expect to use your car for long trips over a period of time, mileage-based car insurance may be worth obtaining quotes for. Additionally, if you are a safe driver, some insurers offer the opportunity to reduce your rates by measuring your current safe driving patterns and habits.

Typically, mileage-based insurance will set a fixed base rate determined from typical factors like age, driving history and the vehicle driven. Above this, you will be charged a certain low amount for each mile driven and measured through an insurer-provided device or smartphone app. Listed below are examples of car insurance companies that are making an impact in this market, but keep in mind that availability may be limited in some states. The best way to know if you qualify is to request a quote, many of which can be submitted quickly on a company’s website.

Root

Root was one of the first car insurance companies in the U.S. to be fully app-based. The app tracks both the number of miles driven and driving habits in order to set your premium. As such, premiums will vary from month to month, although Root does have a test-drive period to help you gauge how much your premium might be. Safe driving and avoiding hard braking and rapid acceleration can help keep premiums low, but you run the risk of being charged higher premiums if poor driving patterns are detected. For these reasons, the driver largely controls the premiums.

Metromile

Metromile is a pure pay-per-mile auto insurance company. Unlike Root, your rate is tied directly only to the miles you drive, as Metromile does not monitor driving behavior. There are two components to the monthly premium. The base rate is quoted using traditional underwriting principles looking at driving history and other factors. The second component is tied directly to the number of miles you drive which are measured by a company-provided device. Metromile is also unique from other low-mileage insurance companies in that the per mile rate applies to the first 250 miles each day. After that, the additional miles are free of charge.

MileAuto

MileAuto is one of the newest companies in the mileage-based insurance business. It is similar in approach to Metromile in setting a base premium rate using traditional underwriting standards. The premium is then adjusted monthly based upon the number of miles driven. MileAuto is unique in that it does not employ a telematics device or mobile app. Instead, drivers are reminded monthly via email and text to take a photo of their odometer. Although this could be an additional task every month, it could be ideal for drivers who may have privacy concerns over other more intrusive data collection methods..

Milewise from Allstate

Milewise is a pay-per-mile-based insurance policy, but brings with it the resources and credibility of a well-known traditional insurer through Allstate. Also using a plug-in device, Milewise measures driving miles as well as behaviors. These, in turn, set the fluctuating monthly rate, which combined with a traditional base rate, sets the premiums. With a feedback loop on its app, Milewise also provides an opportunity for the insured to improve driving habits.

Noblr

Like others above, Noblr assesses driving habits and miles via its mobile app and uses the data to set monthly premiums. However, Noblr goes beyond this and looks at certain unique patterns in driving behavior other than the number of miles or braking habits. For example, Noblr assesses risk by also reviewing the driver’s road choices and monitoring cellular phone usage to measure, and hopefully discourage, texting and driving. It also tracks the time of day you drive and road choices, such as highway or street, but keep in mind that rating factors can vary by state regulations.

Lemonade

Although currently only available in Illinois, Lemonade now provides car insurance to drivers with a focus on personalization. Like some of the other companies on this list, Lemonade also uses telematics data collected through its mobile app to track drivers’ mileage and driving habits and set their insurance rate. There are also additional discounts for low-mileage and safe drivers,

What’s the difference between pay-per-mile and usage-based insurance?

Although these two types of car insurance sound similar and can benefit low-mileage drivers, they are slightly different. To determine insurance premiums in a pay-per-mile policy, drivers typically pay a base rate and a per-mile rate for every mile they’ve driven that month. In usage-based insurance, insurance companies may use a telematics device or your phone to track driving habits in addition to mileage. Some companies offer usage-based insurance as a way to earn extra savings on an existing car insurance policy or to earn rewards if their car insurance is with another provider.

Pay-per-mile insurance may be a great fit for drivers who rarely drive and come in far below the threshold of national average annual miles. On the other hand, usage-based insurance could benefit any driver regardless of their annual mileage to help save some money on insurance costs and be rewarded for safe driving habits.

Methodology

Bankrate utilizes Quadrant Information Services to analyze 2021 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on a 40-year-old male and female driver with a clean driving record, good credit and the following full coverage limits:

  • $100,000 bodily injury liability per person
  • $300,000 bodily injury liability per accident
  • $50,000 property damage liability per accident
  • $100,000 uninsured motorist bodily injury per person
  • $300,000 uninsured motorist bodily injury per accident
  • $500 collision deductible
  • $500 comprehensive deductible

To determine minimum coverage limits, Bankrate used minimum coverage that meets each state’s requirements. Our base profile drivers own a 2019 Toyota Camry, commute five days a week and drive 12,000 miles annually.

These are sample rates and should only be used for comparative purposes.

Mileage: Rates were calculated by evaluating our base profile with the following differences in mileage: 2k, 5k, 12k (base), 15k and 20k.

Written by
Rick Hoel
Insurance Contributor
Rick Hoel is an international business attorney and legal and insurance writer for Bankrate.com, Reviews.com and Accessibility.com. Over the last several years, he has covered topics dealing with personal and commercial insurance and technology and the law. Rick is General Counsel and Director of Risk Management and sits on the Board of Power Stow Americas Inc., a subsidiary of Power Stow A/S in Denmark, the world leader in the supply of tracked conveyor systems to the airline industry.
Edited by
Insurance Editor