Did you recently start working from home or are driving a lot less this year? Good news -- your car insurance rates should go down. The converse is true if you spend a lot of hours and miles on the road due to a long commute, chauffeuring kids around or other reasons – you’ll pay more for auto insurance. The more you’re on the road, the higher the chance you’ll get into an accident. That means car insurance companies consider you a higher risk and so your rates will reflect this.

In a nutshell, insurance companies reward those who pose less risk, so drivers who drive less receive low mileage car insurance discounts.

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Why am I asked for my annual mileage?

Wonder how car insurance companies know how many miles you drive? Simple, they ask you. Estimated annual mileage is a rating factor, so insurers ask how many miles you drive each year on your insurance application. Don’t fib on the number to get a discount. Some insurance companies will request mileage checks during the year if you submit a lower than average number.

If you are driving less, because you’re working from home, recently retired or some other reason, make sure you put in an accurate guess on your “new” annual mileage. Don’t just keep the amount that you’ve entered in the past or a default amount the company may have on its form.

There are other ways, too, for car insurance companies to determine your annual mileage. Rather than have you tell them, they can monitor your driving performance and mileage if you sign up for one of their “pay-as-you-drive” or “usage-based” insurance plans. We will explain more about those options, and how to earn extra discounts, in a bit.

What are commuting miles and how do they affect my car insurance rates?

Insurance companies are also interested in how many miles you drive to work and back. They will want to know how many miles you commute and how many days per week. This can help the car insurance provider check that it matches with the annual mileage you entered, but also it may help them determine again how much of a risk you pose.

For example, if you live in a suburb of a larger metro area, such as Los Angeles, the base insurance rates tend to be better. But if you commute 40 miles each way for work, this may cause your rates to rise because the insurance company can infer that you are commuting into the busy, traffic-packed metro area for work, which, of course, makes you more of a risk to be in an accident than if you were driving five miles to work in your local area with less traffic.

In general, if you drive more than 20 miles each way to work your car insurance rates will be higher.

What is considered low mileage for car insurance?

It will depend on state laws as well as your car insurance company’s own guidelines. For the most part, insurance companies consider 12,000 miles a year to be lower than average. Some insurers, however, find that under 10,000 miles is low mileage and wait to hand out bigger discounts if you’re under that number of annual miles.

To get the best low-mileage discounts you typically must drive under 7,000 or 5,000 miles annually.

Insurance companies tend to have car insurance mileage brackets and your rates can be higher or lower based on where your annual mileage falls.

Mileage brackets for car insurance are simply the internal tier system that car insurance companies use to determine if motorists drive an average amount, or more or less. They are based on each car insurance company’s unique algorithms and on any state laws surrounding this topic.

Brackets vary but here are some common ones we rate rates for to show how rates increase as annual mileage goes up. We ran rates for a driver with full coverage located in Los Angeles, California and found the rates increased based on these common mileage brackets:

  • 5,000 miles or under had best rates
  • 7,500: Up average of 10% from 5,000
  • 10,000: Up average of 7% from 7,500
  • 12,000: Up average of 4% from 10,000
  • 20,000: Up average of 25% from 12,000

Mileage above 20,000 stayed the same, 0% increase. Thus, in this example, annual mileage over 20,000 was not rated any worse than if you were driving just 20,000 miles a year.

The cost of a car insurance policy with 20,000 miles or more driven annually was found to be 36% more expensive than if you drove 5,000 miles or less a year. In our example, the driver with less than 5,000 miles would save around $750 compare to the driver that was on the road for 20,000 miles or more.

What is the average annual mile driver per year?

According to the most recent data (2018) from the Federal Highway Administration (FHWA), 13,746 miles are driven on average in the United States by drivers.

Average Annual Miles per Driver by Age Group

AgeMaleFemaleTotal
16-198,2066,8737,624
20-3417,97612,00415,098
35-5418,85811,46415,291
55-6415,8597,78011,972
65+10,3044,7857,646
Average16,55010,14213,476

Source: FHWA

Low mileage discounts

Low-mileage discounts vary. Auto insurance providers speak of offering up to 20% for a low-mileage discount, however, our data studies show many drivers get 5% or under on average nationally.

California is one state that gets better mileage discounts than others due to its unique laws regarding what and how insurance companies can use rating factors. California drivers get around an 11% low-mileage discount, on average. Under state law, mileage is one of the three primary factors insurance companies can use, the other two being a driver’s safety record and years of driving experience. So, if you drive fewer miles in California, the discount is larger, but also if you have high mileage your rates spike upwards.

Is there low mileage insurance?

While mileage is normally just one part of the rating factors car insurance look at, there are some programs that some insurance companies offer where mileage is a much bigger deal. Sometimes they are referred to PAYD or pay-as-you-drive programs.

One insurance company that is mileage based is Metromile, which is available in nine states. It has a two-part pricing system where you have a low monthly base rate and then a second per-mile rate. So, for the base rate factors like your driver history, age, type of vehicle, credit and length of prior insurance is looked at. Then the mileage, so if you are on vacation and doesn’t use your car at all for a month, you’ll only be charged the monthly base rate. The mileage charges are capped at 250 miles per day (150 in New Jersey), so you won’t be charged for miles above that amount each day.

Another per mile insurer is Mile Auto that is only available in Oregon, Illinois and Georgia. It claims to save drivers 30% to 40% off their current car insurance rates. Mile Auto doesn’t have you install anything to monitor or track your mileage. Instead, you only snap a photo of your odometer once a month and send it to them. The miles you’ve driven plus your base rate total your monthly premium.

Nationwide has its SmartMiles pay-per-mile program available in 21 states plus D.C. Like MetroMile it has a base rate and then cost per mile.

Allstate has Milewise which has a daily rate plus per-mile rate to give you your cost per day that is added up for your monthly premium. This program is available in 13 states.

There is also State Farm’s Drive Safe and Save with OnStar that tracks your mileage and gives discounts based on annual mileage. It does not have a per-mile rate like Metromile and the others listed above, but is more of a tracker of miles to give better discounts if you drive less.

If your annual miles are low, check out these programs to see if they are available in your state and would cover your specific needs. If so, give it a shot to save. If for some reason you don’t like the program you can switch to another or go back to a policy that doesn’t take miles so seriously.

Will a usage-based insurance program help me save?

Many insurance companies are offering usage-based insurance (UBI) for drivers to try out. These programs will take into account your mileage, but are more concerned with monitoring your driving behavior to see if you’ll earn a discount.

Here is an overview of a few of the usage-based offerings:

Progressive’s Snapshot – One of the first UBI rating programs. Either using a mobile program or plugging in a tracking device into your car’s OBD-II port, your driving will be tracked. It looks at driving habits, such as how much your drive, when you drive and how you drive. If you brake too hard or speed too much that can lower your driver score, which in some states, could increase your rates. If instead, you show to good driving behavior you’ll earn a discount.

Allstate’s Drivewise – A little different than Milewise, this program has you plug in a device and determines if you can get a higher safe driver discount. Allstate says the discount can be up to 40%.

Farmer’s Signal – By signing up and downloading their Signal app you’ll receive a 5% discount on your auto policy. You get an opportunity to earn up to 15% each time you renew your policy – based on your safe driving. You are also eligible to win rewards each month if you keep your focused driving score at 80% or better. You can save an additional 10% if you have a young driver in your household.

Usage-based insurance can help you save with the generous discounts the insurers offer if you show good driving patterns, but also monitors your own driving -- and that of any teen drivers in the household. You may not obtain a low-mileage discount or even good driving discounts but it may alert you to bad driving behaviors so you can correct them and keep you from being in an accident. An accident-free record will help you save.

How to save on car insurance?

If you drive a little or a lot of miles a year, the key to finding the best priced policy for your needs is to shop around. If you are driving less annually, then make sure to alert your car insurance company to the lower annual miles driven and see if at your next renewal your premiums are lowered. Also, shop around at renewal time to see if other insurers offer better discounts and can bet your insurer’s rate quote. Same holds true for drivers with higher annual mileage, shop around, that is the best way to find not only cheaper car insurance rates but to find an insurer that best fits your needs.

If you don’t mind your car insurance company monitoring your driving, look into the usage-based programs available and give one a test drive. Most let you back out of the program if you find your driving style doesn’t get you discounts, especially since some of the programs now can raise your rates if the driving behavior is deemed to be bad.

Comparing rate quotes from multiple companies is the best way to save money on car insurance, no matter how many miles you drive each year.

Top Takeaways:

  • If you drive fewer miles per year you pose less risk to your insurer and so will pay less.
  • Ask for a low mileage discount and adjust your annual mileage with your insurer if you recently started driving less.
  • To track your mileage and get reports on your driving behavior, consider a usage-based insurance program that many companies are offering.

Car insurance based on mileage, at least in part, makes sense. The more you’re behind the wheel, the more chance there are of being in an auto accident. However, it’s only one of the common rating factors car insurance companies look at. So, even if you drive a lot there are many other ways to lower your car insurance rates.