What you need to know about Low Mileage Car Insurance
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Insurance companies may require annual verification of your odometer reading
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Mileage insurance bills you monthly insurance payments based on your mileage used
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It is also possible to receive auto insurance discounts without asking from insurance companies that bundle insurance policies with a specific insurer.
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Discounts are given to loyal customers or accident-free, low-mileage drivers for a period.
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Drivers with an average annual range of 5,000 miles can alert an insurance company to receive a low mileage discount.
Do you have a car that barely leaves the garage most days? Most insurance companies offer a conventional low mileage discount to drivers who keep their annual mileage below a certain limit, such as 6,000 miles per year. In most states, the discount reduces insurance rates on a full coverage policy by 2 percent. Premium savings are greatest in California.
Insurance companies may require annual verification of your odometer reading. Some may ask you to fill out a form to check your estimate against readings taken from other sources. Others use agents to take a photo of the reading.
There are ways to get a low mileage discount that will get you cheaper auto insurance coverage.
1. Pay as you drive
Pay-per-drive vehicles, like In-Drive, install telematics devices to monitor your vehicle, offer higher discounts for infrequent drivers and careful drivers as well. Safe drivers who cover fewer miles can save up to 25 percent or more. Most pay-as-you-go plans offer a 5-10% discount when you sign up, then use the data collected to give a discount on your renewal period. Connect a telematics device to the car’s on-board port (OBDII) to get a discount. Almost all cars from 1996 on have a built-in OBDII port.
2. Pay-per-mile auto insurance
Mileage insurance bills you monthly insurance payments based on your mileage used. This mode of payment saves you approximately 45% in savings for careful drivers who drive fewer than 5,000 miles per year. The device keeps track of the distance traveled, which is used to set your mileage rates.
In this way, you are guaranteed low mileage on the auto insurance types of each plan; Instead of reducing coverage to save money, you limit the risk insurance companies face when you hit the road.
Customers are charged a standard monthly rate based on individual qualifying factors: age, driving record, location, car type, credit, and insurance history in some states. Each month, the driver pays the flat rate plus a per-mile fee charged on miles logged through the mileage device.
How to qualify for the low mileage auto insurance discount
It’s easy to qualify for many auto insurance discounts, and many insurance companies offer these discounts, but you have to ask. A Princeton Survey study found that 16% of motorists have standard auto insurance discounts.
It is also possible to receive automatic auto insurance discounts from insurance companies that bundle insurance coverage with a specific insurer. Discounts are given to loyal customers or accident-free, low-mileage drivers for a specified period.
However, you can request discounts such as:
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a short trip discount or no trip
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Early payment of your coverage renewal check
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Have academic title(s)
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cops or teachers
Common Low Mileage Discounts
Many people aren’t aware of auto insurance discounts, such as the low mileage premium discount – this is for people who have reduced their driving mileage by either working from home or parking their vehicles because they no longer need to drive. A Quadrant Services mileage investigation found that driving an average of 6,000 miles a year pays nearly 7.5% less than driving 16,000 miles a year. 16,000 miles is, in fact, more than what regular Americans drive annually, according to the US Department of Transportation.
Huge mileage savings in select states
The disparity in low-mileage drivers is greatest in select states, with California topping the list.
The top five states where drivers save less than 5,000 miles a year are:
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california – 17%
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Washington DC – 11.1%
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Alaskan 11%
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alabama-10%
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Hawaii – 10%
However, some states have little or no effect on reduced mileage insurance coverage rates. States where the short driving distance barely makes a dime include:
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North Carolina -0
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Utah -1%
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Texas -3%
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Connecticut-3%
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Rhode Island-3%
iii.org Vice President Loretta Worters says insurance companies raise premiums for drivers who drive a lot of miles because they pose a risk. High mileage drivers are more likely to cause accidents than low mileage drivers. California, for example, has insurers that charge higher premiums because the state has a lot of drivers on the road.
The role of state insurance laws passed in 1988 limits the factors California auto insurers use when determining rates for the following:
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mileage traveled
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safety driving record
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driving experience
Insurers can set minimum rates based on these three main factors. This law magnifies the impact of driving mileage.
Insurance Expert/Consultant: Douglas Heller says asking high premium rates for drivers who drive a lot of miles is fair to charge policyholders. He adds that basing rates on mileage is much better than other criteria like education level and income.
Ignore driving mileage pays?
In the extreme, experts don’t quite understand why insurers in North Carolina and select other states virtually ignore miles when rating auto policies.
North Carolina Insurance Commissioner Wayne Goodwin says that an increase in mileage does not increase the level of risk on the road. He, however, says that the different prices in the state are a key factor in preventing insurers in the state from raising mileage premiums.
In some states, such as North Carolina, insurers request premium rates independently from the state insurance office; insurers submit rates to the local State Rate Office. The State Office offers a base rate for all of its insurance carriers in North Carolina. Goodwin’s office reviews the requested rates and attaches a cap indicating the exact amount insurers must charge consumers.
The head of the office says that driving miles is a price factor. However, it does not have any significant effect. Local government has kept auto insurance rates low in NC State, which is ranked as one of the lowest insurance premium costs in America; according to NAIC figures.
How to reduce car insurance mileage rates
For drivers in an average annual range of 6,000 miles, they can alert an insurance company to purchase a mileage discount. However, many drivers with less mileage miss out on available discounts due to lack of disclosure. Conversely, not everyone reduces their mileage to save on insurance costs.
Additional ways to decrease high mileage usage
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Increase your deductible
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Look up price quotes from various insurance companies
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Avoid highway speeding tickets and other traffic violations
Car drivers may try to fake miles on the speedometer to avoid higher insurance coverage rates. This is unethical, and a policyholder can lose all insurance and also be blacklisted. Lying to the insurer is an illegal act, the insurance fraud of it. The best way to get a mileage discount is to buy a car that has average mileage and the driver needs to make sure to maintain their speed levels at all times.