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How many miles do you log in your car each week? The answer might play a big role in how much you pay for car insurance.

Car insurance companies may look at the number of miles you drive when setting your rates. If you drive infrequently — such as someone who works from home and no longer commutes — your rates might be lower.

“Generally, people who drive less often have a decreased chance of being in an accident,” says Kelly Hernandez, associate vice president of personal lines telematics at Nationwide Insurance.

On the other hand, those who spend many miles on the road may pay more. 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.

Key Takeaways

  • Your insurance company keeps track of your driving performance and mileage if you buy their ‘pay-as-you-drive’ or ‘usage-based’ insurance plans.
  • To avail yourself of the low-mileage discounts you should typically drive under 7,000 or 5,000 miles annually.
  • Your car insurance rates will be higher if you drive more than 20 miles each way to work.
  • Insure.com’s data studies show many drivers get low mileage discount of 5% or under on average nationally.

Why am I asked for my annual mileage?

Have you ever wondered how car insurance companies know how many miles you drive? The answer is simple: They ask you to estimate the total when you apply for insurance.

You might be tempted to cheat and tell a little white lie, suggesting you drive very little in hopes of getting a lower insurance rate. However, it is not wise to fib on the number simply to get a discount. Some insurance companies will request mileage checks during the year if you submit a lower-than-average number, for example.

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 also are interested in how many miles you drive to work and back. They want to know how many miles you commute and how many days per week. This can help the car insurance company better gauge whether the total number of miles you estimated you drive each year matches with reality.

For example, if you live in a suburb of a larger metro area, the base insurance rates tend to be better. But if you commute 40 miles each way for work into the downtown of that major city, it may cause your rates to rise. That is because you are commuting into the busy, traffic-packed metro area for work, which 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.

Today, fewer people are commuting to work. “As a result of the pandemic, we’re seeing consumer driving behavior changing permanently in many instances,” Hernandez says.

As a result, there has been a “notable increase of new customers” who can benefit from mileage-based insurance programs, she says.

What is considered low mileage for car insurance?

Determining what qualifies as “low mileage” depends 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.

However, some insurers find that you have to drive less than 10,000 miles to qualify for low mileage, and they wait to hand out bigger discounts until you’re under that number of annual miles.

“The typical candidate who would benefit from a mileage-based insurance program drives less than 10,000 miles a year,” Hernandez says.

Some insurers might offer even bigger low-mileage discounts if you drive less than 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.

Common mileage brackets  

Companies use mileage brackets to determine insurance rates based on their mileages. It usually varies from one company to another. But there are some common mileage brackets that many insurers use.

The table below depicts the common mileage brackets alongside the percentage increase in insurance rates as mileage goes up.  

MilesIncrease in rates
5,000Had best rates
7,500Up average of 10% from 5,000
10,000Up average of 7% from 7,500
12,000Up average of 4% from 10,000
20,000Up 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.

Insure.com has determined that the cost of a car insurance policy with 20,000 miles or more driven annually is 36% more expensive than if you drive 5,000 miles or less a year. In our example, the driver with less than 5,000 miles would save around $750 compared to the driver who was on the road for 20,000 miles or more.

What is the annual mileage for car insurance? 

Americans drive an average of more than 13,000 miles per year, according to data on the  Department of Transportation’s Federal Highway Administration (FHWA) website, which was last updated in May 2022.

Annual mileage totals affect insurance premiums because the number of miles you drive predicts the risk of you filing a claim.

The amount drivers pay for their insurance premium is determined by the number of miles they put on their cars. The greater their mileage, the more expensive their insurance policy will be. On the other hand, the lower mileage means a lower monthly payment.

How to get low-mileage car insurance?  

To get the better rates associated with low-mileage car insurance, you must determine if you qualify for such a perk by following the steps below:

  • Calculate your current average mileage. Set your car’s odometer to zero. Then, take note of the number of miles your car travels over the next week. To get the current annual average mileage, multiply the obtained odometer value by 52.
  • After calculating the current average mileage, reach out to your insurer, ask for the quotes to see if you qualify for the low-mileage auto insurance 
  • If you drive less than 26 miles per week, you may have another option: “pay per mile” insurance. With this type of coverage, you pay for each mile you drive.  

What is the average annual miles driven per year?

U.S. drivers travel 13,476 miles, on average, according to the most recent FHWA data.

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. On the other hand if you drive a lot of miles, your rates will be higher.

Is there low mileage insurance?

While mileage is normally just one part of the rating factors car insurers look at when setting rates, there are programs that some insurance companies offer where mileage plays a much bigger role in setting your rate. These programs often are referred to as PAYD — or “pay-as-you-drive” — insurance.

One insurance company that is mileage based is Metromile. It has a two-part pricing system where you have a low monthly base rate and then a second per-mile rate.

The mileage charges are capped at 250 miles per day (150 in New Jersey).

Metromile is available in the following states:

  • Arizona
  • California
  • Illinois
  • New Jersey
  • Oregon
  • Pennsylvania
  • Virginia
  • Washington

Another per mile insurer is Mile Auto. It says drivers can save 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.

Mile Auto is available in the following states:

  • Arizona
  • California
  • Georgia
  • Illinois
  • Ohio
  • Oregon
  • Pennsylvania
  • Tennessee
  • Texas

Other insurers to note:

Nationwide has its SmartMiles pay-per-mile program. Like Metromile it has a base rate and then cost per mile. The program is available in 45 states, Hernandez says. “If you feel that you drive less than an average customer, SmartMiles could be a good option to consider,” she says.

Allstate has Milewise, which has a daily rate plus per-mile rate to give you your cost per day. This program is available in more than a dozen states.

There is also State Farm’s Drive Safe and Save with OnStar that tracks your mileage and offers discounts based on annual mileage.

If you do not drive a lot over the course of a year, check out these programs to see if they are available in your state and would cover your specific needs. If so, give one of them a shot to save.

If for some reason you don’t like the program you can 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. Snapshot was one of the first UBI rating programs. Your driving is tracked through either a mobile app or a tracking device you plug into your car’s on-board diagnostic port.

The tracking reveals your driving habits, such as how much you drive, when you drive and how you drive. If you brake too hard or speed too much, it can lower your driver score — which could increase your rates in some states. If, instead, you show 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%.

Farmers’ Signal. By signing up and downloading the Farmers Signal app, you have the chance to earn discounts at your next renewal if you display good driving habits — although it’s also possible that risky behaviors could drive your costs higher.

You are also eligible to win rewards in a drawing each month if you keep your focused driving score at 80% or better.

How to save on car insurance?

Whether you drive a little or a lot of miles each year, the key to finding the best-priced policy for your needs is to shop around.

If you are driving fewer miles annually, make sure to alert your car insurance company and see if you can get your premiums lowered.

Also, look around at renewal time to see if other insurers offer better discounts and can beat your insurer’s rate quote.

If you log a lot of miles behind the wheel, you should still shop around for a policy. That is the best way to both discover cheaper car insurance rates and find an insurer that best fits your needs.

If you don’t mind your car insurance company monitoring your driving, look into usage-based programs and give one a test drive. Most of these programs let you back out if you find your driving style doesn’t get you discounts.

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.

Frequently asked questions

Does driving more miles increase insurance?

The answer is yes. There is a good chance that if you drive more miles, it will increase your insurance rate.

Why do insurance companies ask how many miles you drive?

Insurance companies want to know how many miles you drive because it helps them to determine how big a risk you pose as a driver.

The more miles you drive, the more likely it is that you will get into an accident. On the other hand, the fewer miles you drive, the less likely it is that you will be involved in a crash.

Once insurers understand the risk you pose, they can better determine a rate to charge you for car insurance.

–Penny Gusner contributed to this report.

author image
Chris Kissell
Contributing Researcher

 
  

Chris Kissell is a Denver-based writer and editor with work featured on U.S. News & World Report, MSN Money, Fox Business, Forbes, Yahoo Finance, Money Talks News and more.

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