Is Car Insurance Cheaper If You Drive Less Than 25 Miles Per Day?There are a number of things that determine your car insurance premiums. If you cover an average of 25 miles per day, most insurance companies will consider you as a low mileage driver which helps to achieve a lower premium amount.
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Car insurance has a basis on the concept of risk. The more mileage you cover, the more likely you can get into an accident. Most insurance companies use your average yearly mileage to calculate their car insurance rates. So it is very likely that you will pay lesser premiums if you drive for less than 25 miles daily.
However, other factors also play a role in determining what rate your insurance company will charge. So it is very possible to be driving for less than 25 miles per day but you still end up paying more than another person whose mileage may be higher.
In this article, we will explain how the milage you drive affects your car insurance rates.
How Does Your Estimated Mileage Affect Your Car Insurance Premiums?
Mileage is one of the biggest factors that auto insurance companies look at before deciding your premiums.
For first-time car owners, the mileage may not be as crucial in determining their insurance premiums. However, the insurance company will still ask you to estimate the mileage that you expect to cover in your new car. Keeping your guess as accurate as possible can save you from paying high premium prices.
For experienced car owners, mileage can be pivotal when it comes to their car insurance rates. Generally, a person who maintains a low mileage in a year will pay less than a person who covers more mileage.
Insurance companies will only ask you to provide details on your mileage occasionally. It is important to give them accurate information. It may be tempting to understate your mileage and this is very understandable because auto insurance companies rarely send their personnel to counter-check the information that you provide to them. However, this may come back to haunt you afterward.
Suppose you get into an accident, and insurance companies send their representatives to your repair shop. These representatives will aim to ensure that the actual vehicle's mileage tallies with the information that you have been providing to them. If the insurer establishes that the mileage is way above what you've presented, you will be liable for insurance fraud. As a result, you will not receive compensation from the insurer.
Save yourself from this trouble by genuinely maintaining a low mileage for your vehicle and accurately reporting your miles.
How Many Miles Does The Average Person Drive a Year?
The Average American drives 12,785 miles per year according to data provided by the Department of Transportation Federal Highway Administration. That number rounds to about 35 miles driven per day.
If you fit into the average annual mileage usage, evaluating your car insurance premium can save you money.
What Is Low Mileage Car Insurance?
If you cover an average of 25 miles per day, most insurance companies will consider you as a low mileage driver which helps to lower your premiums. Anything under 50 miles per day is typically considered low mileage.
Are There Low Mileage Discounts?
Most car insurance companies offer discounts for low mileage drivers. These discounts can vary in their amounts and there is also the possibility that you could be receiving the discount without really knowing it. For instance, an insurer may just decide to give you a low premium based on your low mileage cover without expressly pointing out the discount.
Some insurance companies do not place a lot of value on the driver’s low mileage. They will still charge high premiums regardless. So you need to review your car insurance company's terms and conditions before you expect such favors. By conducting this due diligence, you get to prepare how to pay up and avoid the unnecessary heartaches that result from unrealistic expectations.
What is Pay Per Mile Car Insurance?
Pay-per-mile car insurance, also known as pay as you go or mileage-based insurance offers an affordable car insurance option for low mileage drivers. It offers the same coverage as traditional car insurance, but as the name suggests, drivers pay per mile they drive.
In pay-per-mile insurance, you will have a base rate charge plus a mileage charge that makes up your monthly rate. For example, if your base rate is $25, and you drive 450 miles at a $0.05 rate, your monthly rate would be $47.5.
This can be an excellent option for people who work from home, utilize public transportation when available, or retirees who drive fewer miles.
Your per-mile rate is monitored by telematics, a plug-in device that measures your driving behavior and mileage usage. Pay-per-mile insurance programs are a great option to save money on auto insurance rates that reward low mileage driving habits.
What is Usage-Based Insurance?
Usage-based insurance programs are slightly different than a pay-per-mile car insurance plan. Usage-based insurance uses telematics devices to determine safe driving habits.
The device monitors speeds, fast-breaking, time of day that you drive, mileage, and can monitor distracted driving tendencies.
Many car insurance companies offer discounts for adding their telematic devices to help incentivize safe driving, and mitigate the risk of an accident and having to pay out on a claim.
Some companies will allow you to use their devices for a trial period and they will determine your rates based on your driving habits during that time. Other companies will allow you to continuously use their app or device and will allow your premiums to fluctuate based on your driving.
Almost all major insurance providers provide some sort of usage-based insurance plans, so be sure to compare quotes from multiple companies to decide what is the best plan for your needs and budget.
Speak to a PolicyScout consultant, or use our auto insurance calculator to get help with securing your quote.
What Other Factors Can Make Car Insurance Cheaper?
Aside from low mileage, factors such as your driving habits, the type of car that you drive, and your driving record play a role in determining the amount of premium you will be paying. You can deliberately tweak these factors in your favor so that you end up paying lesser rates in the long run.
Take a look at some of the ways these factors will affect your car insurance rates.
Your car insurance company will analyze your driving record and use it to determine the rates that you’ll be paying. If you had a role in multiple accidents in the past, your rates will be higher. Speeding tickets and DUIs will also negatively impact your rec0rd and your insurance company will view you as a high-risk investment.
Drivers who do not have accident records can benefit from this analysis by ensuring they stay accident-free.
Some demographics go into consideration which include the status of your neighborhood, age, and gender.
For example, even if you are a low mileage driver your zip code will still play a critical role in determining the number of payable premiums.
If you live in certain zip codes you may still pay more premiums because of the conditions of such neighborhoods. Some neighborhoods have a higher prevalence of risk for insurance companies. This necessitates the need for higher premiums even if drivers in these neighborhoods cover low mileages per day.
To be safe from the high premiums, you can check out the rates for your zip code. If your current area has high rates and moving is feasible for you, relocating to a more desirable neighborhood could save you in the long run. You could get double the savings by having low mileage on your car and living in a low-risk neighborhood.
Limits and Deductibles
A limit refers to the maximum amount that the insurance company will pay to cover a loss. Each auto insurance policy has a unique coverage liability limit. Typically, the more coverage you purchase, the higher premiums you'll have to pay.
A deductible on the other hand is the amount you have to pay before the insurance company can help you to cover the insured loss. Deductibles have an inverse relationship with the premiums you'll be paying. If you want to pay lesser premiums, just set your deductible limit at a higher level.
Type of Car
The amount charged per premium will vary depending on the type of car that you are driving. Insurance companies analyze how safe the car is when driving or how well it can protect an occupant in case of an accident. If the car offers excellent protection and safety, you will most likely pay lesser premiums.
Car insurance rates are also based on the potential damage that a car can inflict on another motorist in case of an accident. The higher the damage, the more the premiums.
Insurers look at an applicant's credit score as a way of determining your car insurance rates. Oftentimes, insurers think that a lower credit score will mean you are more likely to file a claim. Avoid dings to your credit like late payments to ensure you're not also adversely affecting your car insurance premiums.
Get Car Insurance Today
In most jurisdictions, you cannot drive on the road unless you have insurance cover. These covers are very essential and will help you to cover repair or medical costs in case you get into an accident. Additionally, they protect your resources. You won’t have to spend anything out of your budget when you encounter an accident if you have car insurance cover. Get yours today or renew it in case you have an insurance cover already.