How Yearly Mileage Affects Auto Insurance Rates

The amount of miles you drive each year can affect your auto insurance rates. Read more about how it works here.
Closeup dashboard of mileage car.

Everybody pays a unique amount for their car insurance. Insurers determine your rates based on a wide range of factors. These factors include things you can’t control, such as your age or gender. But they also include things that are in your control, including your driving record, credit rating, and marital status.

Another detail that insurers factor into your rates is your annual car mileage. How much you drive each year plays a major role in how much you end up paying for car insurance. The more you drive, the more opportunity there is to have tickets and accidents. This means you’re a risk to cost them more money. Because of this, you’ll likely receive higher rates if you drive more miles per year. This can take a few forms. Some insurers will look at your commute, while others may just assess how often you drive.

In this article, you’ll learn more about how insurers look at your car mileage as a rate factor. This includes what exactly insurers will consider regarding your car’s annual mileage. We’ll tell you about pay-per-mile or usage-based insurance companies and how they differ from regular insurers. We’ll also answer a few common questions about how insurers use your car mileage as a rate factor.

Why Insurance Companies Use Yearly Mileage

One of the factors that can affect your auto rates is your car’s annual mileage. Insurers look at this metric because it can help them predict your overall risk of filing claims. When you’re on the road more often and for longer periods of time, there is a higher chance that you could end up in an accident. In other words, there’s more opportunity for error.

Insurers will typically want to know your average annual miles. But they may want to know how long your commute is. How frequently you drive may also come up. All of these data points help insurers determine your risk and set your rates accordingly.

How Insurers Look at Your Car Mileage

There are several ways that insurers can assess your car mileage. They might just want to look at your average annual mileage. But that’s not the only metric that they may want to see. Here’s are the common ways that insurers evaluate your car’s mileage:

How Many Miles You Drive Per Year

The average amount of miles that you drive per year is one of the stats that your insurer will take a look at. Driving more miles on average each year will cause you to pay more for your car insurance. Driving fewer miles per year means you’ll likely pay less for your insurance.

According to Kelley Blue Book, driving 7,000 or fewer miles annually will get you the biggest discount with most insurers. Insurers usually consider this to be “occasional driving.” You may also see insurers call this type of driving, “pleasure use.”

How Long Your Commute Is

A commute is the distance you travel between your home and your workplace. Commuting miles are the number of miles you drive to work each day. Commuting to work is one of the major reasons why people drive in the first place. Your insurers know this and will often factor in your commuting miles when assessing your mileage.

Typically, insurers won’t raise your rates unless you drive more than 20 miles to work each day. Insurers usually ask you to disclose this information when you apply for a policy. If you move or change your workplace, you’ll want to tell them so that you don’t accidentally pay more than you need to.

You should also note that some insurers will factor in the location of your commute. Commuting in a rural area is less risky than if you were to drive through a densely populated city.

How Often You Commute

How many times you commute to work each week may also be something that insurers look at. A higher commuting frequency means you’re on the road more often. This might cause insurance providers to raise your rates.

Your Car’s Overall Mileage Normally Isn’t a Factor

You may be wondering about whether or not your insurer factors in your car’s overall mileage. Luckily, most insurers don’t consider the number on your odometer. They’re more interested in how often your car is on the road at any given time. Your annual car mileage helps them know how often you’re on the road and how much of a risk you are to get into an accident.

But you should keep in mind that your insurer does consider your car’s age as a rate factor. This isn’t necessarily a bad thing. Older cars usually cost less. With this logic, your insurance may cost less as your car ages. You should be sure to speak with your agent if you have any questions about how your insurer specifically uses your car’s age to price your rates.

What Are Pay-Per-Mile Companies?

There’s an alternative to just buying regular auto insurance like you normally would. Some insurers offer pay-per-mile or usage-based programs. These programs allow you to only pay for the number of miles that you’re driving, plus a set low monthly premium.

Pay-per-mile insurance offers the same types of coverage that you would normally want to buy, such as liability and full coverage. The general idea is that customers will only pay for what they need to and nothing more.

This is different than regular insurance. Regular or traditional insurance policies also require you to pay a monthly premium. But your rates are based on several factors about you. Your car mileage is only one part of the conversation in this case. Traditional insurance also focuses on allowing customers to get discounts. An argument against this is that it may be difficult to lower your rates if your driving record is spotty. Even if you’re a safe driver right now.

Which is Better for Me, Pay-Per-Mile or Traditional Insurance?

With pay-per-mile and traditional insurance both being options, you may be trying to decide which one works best for you. The answer will vary depending on how much you drive.

Here’s why you might choose one or the other:

Who Should Consider Pay-Per-Mile

You should consider pay-per-mile insurance if you don’t drive often. Usage-based insurance will make sure that you don’t overpay on your monthly rates. While some traditional insurers will give you a discount for low mileage, pay-per-mile will only charge you for the exact amount that you drive, plus a low monthly fee.

Who Should Get Traditional Insurance

Traditional insurance is useful for people who drive a lot of miles throughout the year. This would be someone who commutes to work each day. Just note that if you drive a large number of miles per year, you should make sure you’re getting the best rates available. To do this, you should try shopping around between each company. Gathering car insurance quotes and comparing them can help ensure you’re getting the cheapest possible rates.

Is There a Low Mileage Discount?

There usually isn’t an official named discount for having low annual mileage. But insurers generally do reward drivers who keep their miles low each year. Driving between 7,000 to 12,000 miles per year will usually do the trick. Your provider will track this either by asking you to report your annual mileage or by having you use a telematics device. Telematics devices record your driving habits so that you can save more money on your monthly insurance rates.

The exact amount of savings for having low mileage will depend on your insurer. To find out more information, you should speak with your agent about low mileage savings.

Frequently Asked Questions

Q: What mileage is best for car insurance?

A: The best car mileage for your insurance rates is around 7,000 to 12,000 miles each year. Having a little more may not affect your rates. But keeping your mileage within this range will make sure your rates stay low. It might also put you in line for a big discount.

While there isn’t an official low mileage discount, insurers will likely lower your rates accordingly if you drive less. This is because you pose less of a risk. Your insurer will have more information about how much you can save for having low mileage.

Q: Do car insurance companies check mileage?

A: Your auto insurance company will likely ask you to report your mileage each year or when you apply for your policy. They may also track your mileage with a telematics device. These devices will track your mileage and driving habits so that you can get possible discounts.

Some companies will also ask you to provide the number on your odometer throughout the year. This way they’ll know if you’re being truthful about your mileage. Keep in mind that getting into an accident will likely reveal your mileage as well.

Q: Why do insurance companies ask how many miles you drive?

A: Insurance companies ask you how many miles you drive so that they can predict your risk as a driver. Driving more miles means you’re a higher risk to get into accidents. This’ll likely cause them to raise your rates.

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