Drive Less, Pay Less? The Truth About Mileage and Car Insurance


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Driving fewer miles can mean insurance premium savings—for some people with some insurance carriers. So how much less must you drive to see a discount, and how do insurance companies track your mileage? The short answer: savings and tracking vary company to company, market to market. Details, below.

What Are Usage-Based Programs?

In the auto insurance world, rates are essentially based on risk (though there is some debate on the point). Things like driving record, marital status, age, zip code, and even your credit score all factor into how much you pay each month. Spending more time on the road means more opportunity for a wreck (and therefore more of a chance the insurance company will have to make a pay out), so many insurers will actually reward those who drive less with a smaller bill.

An average discount for usage-based car insurance is often 10 to 15 percent.

Importantly, most programs offering low-mileage discounts aren’t just about the odometer—almost every one of the big companies also factors in how safely each person is driving using a telematic device attached to the car. How insurers determine safety varies, but some of the most common are:

  • Time of day (Progressive tracks how often each person drives between midnight and 4am)
  • How often the driver brakes hard
  • Average speed
  • Sudden acceleration
  • High speeds (Allstate notes speeds above 80mph)

One alternative that doesn’t factor in driver behavior at all, and calculates rates solely on mileage, is Metromile. The company currently offers per-mile insurance in California, Illinois, Oregon, Pennsylvania, Virginia, and Washington.

When to Get Involved

For every carrier, safety and mileage-based discounts are opt-in, so you’ll have to call your carrier for details. Similarly, every carrier has a different definition of low-mileage, but most companies offer savings for drivers who travel fewer than between 7,500 and 15,000 miles annually. If you know you drive fewer miles each year, it’s worth it to call your carrier and ask about potential savings. Even if you don’t know your annual mileage, you might consider calling if you meet any of the following criteria (from DMV.org):

  • You’re a senior driver who is retired.
  • You move closer to your place of work or begin a home-based business.
  • You purchase a second car for running errands—when obtaining coverage, be sure your car insurance company is made aware that this is not your primary vehicle.
  • You join a car pool.

If you think you’re potentially eligible for savings based on how much you drive, we suggest taking the opportunity to shop around and see what your auto insurance carrier’s competitors offer in the way of discounts.

How Much Can You Save?

Everyone’s looking to pay less when it comes to car insurance. Though savings will vary low-mileage driver to low-mileage driver, the savings can be substantial. According to Bankrate, a few companies offer discounts up to 50% to low-mileage drivers (though this is rare). With Progressive’s usage-based program, drivers can save as much as 30%, but this is for those who drive very little. Progressive’s general manager of usage-based car insurance, Richard Hutchinson, told Bankrate that, “The majority of the people get an average discount in the 10 percent to 15 percent range.”

Robert Hartwig, president of the Insurance Information Institute told Quoted, “In the future, the cost of auto insurance will likely be more a function of data gathered real time as the driver uses the vehicle and automatically reported to the insurer who then determines the price for insurance.” Now might be a good time to brush up on those driving skills, before big brother is in full force.