Does driving less affect car insurance rates?

Your annual driving mileage can affect your car insurance rates. So can you lower car insurance by driving less? Fortunately, if you are a short distance driver, there is a possibility that you can get much lower rates on your premiums. Our guide will help you find the best car insurance if you don’t drive much.

Most states require you to purchase a minimum level of liability car insurance coverage to legally drive on the roads. There are two main ways to maintain your state’s minimum insurance standards while receiving discounts for your low-mileage driving. The less you drive, the less risk there is of you getting into a car accident. Because your risk is reduced, your insurance company is more inclined to offer you lower rates.

Most insurance companies have some sort of discount for when you drive less than a certain number of miles. The miles for this discount and how much the discount actually is depends on the insurance company. Some companies offer clients a pay-per-mileage insurance policy that can reduce your rates even further.

Ready to buy low-mileage car insurance? Enter your five-digit ZIP code into our free online quote tool above to immediately compare lower low-mileage car insurance rates for driving less.

Car Insurance Options for Low-Mileage Drivers

The average licensed person in America drives 14,132 miles per year. According to DataUSA, the national average commute time is just under 26 minutes. However, if you work from home, live in a city with easy access to public transportation, or are retired, you likely drive much less.

Fortunately, when it comes to car insurance for low mileage drivers, you can follow our tips to reduce your rates. Not only do some companies offer discounts for clients who drive less than average, but there are also pay-as-you-drive car insurance policies that are becoming more popular across the country.

Take a look at the table below to see what companies offer low-mileage discounts to their policy-holders.

Car Insurance Companies That Offer Low-Mileage Driver Discounts

Almost all of the major companies offer this discount to drivers. However, in order to receive this benefit, you must ask your agent about it specifically.

Depending on what insurance company you use, you may get a reimbursement based on your mileage at the end of the year. Other companies will provide you with your discount in other ways.

Read more: Does car insurance go down after the first year?

Depending on what state you live in and what company you use, the savings you’ll receive from this discount can be quite small. That being said, if you live in California, your savings will be much higher than average due to specific state laws.

If you are hoping for more substantial car insurance savings, it may be time for you to consider switching to a pay-per-mile program. Take a look at what major companies offer pay-per-mile programs, as well as a few specific policy details, in the table below.

Pay-Per-Mile Car Insurance Discount Amount by Company

You might be able to save upwards of 60 percent on your overall car insurance rates by switching to a pay-per-mile program.

As a consumer, you have the option of sticking with a recognizable national company that offers this service, like Allstate or AAA. There are also specialty companies, like Metromile and Mile Auto, that focus specifically on pay-per-mile services.

The best way to know which of these companies will offer you the cheapest car insurance rates is by comparing quotes.

What is pay-as-you-go insurance?

Pay-as-you-go insurance, sometimes called pay-as-you-drive insurance, is a fairly new concept among car insurance carriers. You will still be covered by what is included with a standard car insurance policy. However, what you pay might change month-to-month depending on how much time you spend on the road.

The premise of this type of policy is that you are charged a base fee for your insurance. Then, you are charged an additional fee for each mile that you drive.

The programs vary by company and are rather sophisticated. In some cases, there are different fee rates for driving at different times of the day. Riskier driving times, like rush hour, cost a little more because you are surrounded by more cars. More cars on the road mean a greater chance you get into an accident.

In order to track your driving, the insurance company usually uses an app and only tracks your number of miles driven. However, usage-based car insurance policies might install a device into your vehicle that tracks your movements. In some cases, the device may only track the time of day and the miles that you drive. In other cases, the devices track where your vehicle is positioned, the speed limits in your area, and your driving habits.

If you choose a usage-based policy as opposed to a pay-per-mile policy, it is important that you are fully aware of everything the insurance company is tracking. Take the time to read the fine print and be sure you are comfortable with it.

Find out more about pay per mile insurance policies in the following video from the NBC 26 news station.

Not every company currently offers this type of program in all fifty states. For example, Allstate and State Farm both have pay-as-you-go programs in a limited number of states, with plans to eventually offer them in every state.

There are also some smaller, lesser-known companies that are offer pay-as-you-go programs. In order to find the best pay-per-mile car insurance company for your needs, you will have to shop around, ask questions, and compare quotes.

What is considered low-mileage for car insurance?

We’ve covered some of the best car insurance policies for low-mileage drivers, but what do insurance companies consider to be low-mileage?

The exact amount you can drive will vary from insurance company to insurance company.

The low-mileage requirements from USAA car insurance will be different than the low-mileage requirements from Geico car insurance. Some companies will provide you with discounts for driving less than 40 miles a day. However, some companies have a maximum of only 12 miles a day in order to qualify for the discount.

In some cases, the allotted miles you can drive is displayed on the discount page on the insurance company’s website. However, it is more common to have to ask about the terms of this discount.

Some companies don’t even list it as a discount option at all, which is why it is important to ask upfront what discount options are available with the company you choose.

Who would benefit from pay-as-you-go insurance?

As you may have guessed, pay-as-you-go insurance isn’t right for everyone. If you drive an average amount, or if you drive much more than average, then this program could end up costing you far more than what a standard policy would cost you.

The people best suited for this type of insurance are people who drive very little.

If you travel less than 12 miles a day, you will get the most benefit from a pay-as-you-go insurance policy. However, there are some plans that are still affordable at around 30 miles a day.

People who are retired, live in a city with easy access to public transportation, work from home or close to home, and/or don’t travel very much should look into these low mileage car insurance policies.

Young divers and teenage car insurance rates are some of the highest in the country. Therefore, some insurance companies recommend this type of policy for college or high school students because it can help keep their insurance costs down.

Why is car insurance so high for teenagers? Statistically, young drivers cause more accidents than older drivers. Teenagers also lack driving experience. Therefore, insurance companies usually charge them very high average rates.

If you’re a younger driver, a pay-per-mile policy is potentially a great alternative to the standard basic policy. In addition, parents can keep track of their children’s driving habits with these types of programs as well.

What are other ways that I can get lower car insurance rates?

There are several ways to ensure that you get lower car insurance rates besides driving less. If you practice safe driving techniques, maintain good credit, and don’t add any young or teenage drivers to your policy, you’ll be in good shape to score lower rates.

You might also consider purchasing a vehicle that has great insurance loss ratios and top-notch safety and crash test ratings.

You should ask your insurance carrier about any discounts that they may offer. The table below lists a few of the discounts available by most car insurance companies

Common Car Insurance Discounts Offered by Companies

Put in the research so you know that the insurance policy you’re paying for is exactly what you need. If you own an older vehicle, work from home, and do not drive very often, then a full coverage policy might not be worth your while.

You are now an expert on getting lower car insurance rates by driving less mileage. Remember to always compare rates between multiple companies. There is no way you can be sure that you are getting the lowest rates until you do.

Looking for affordable low-mileage car insurance? You can compare low-mileage car insurance quotes for low-mileage drivers right now for free by entering your five-digit ZIP code into our quote tool below.

Case Studies: Impact of Driving Less on Car Insurance Rates

Case Study 1: John’s Low-Mileage Discount

John, a resident of California, decided to reduce his driving habits and started commuting to work using public transportation. He contacted his insurance company and inquired about a low-mileage discount. As a result, he was able to secure a 15% reduction in his car insurance premiums. By driving less, John successfully lowered his car insurance rates.

Case Study 2: Sarah’s Pay-Per-Mile Policy

Sarah, a retiree who only uses her car for occasional errands and outings, opted for a pay-per-mile car insurance policy. She selected a specialized insurance company that offered this program and installed a telematics device in her vehicle to track her mileage. With the pay-per-mile policy, Sarah was able to save approximately 40% on her car insurance premiums compared to a traditional policy.

Case Study 3: David’s Usage-Based Insurance

David, a college student, was looking for affordable car insurance options. He found a major insurance company that provided usage-based insurance. David’s app-tracked driving habits led to personalized rates, reducing his car insurance premiums by 20%, helping him manage expenses better.