Does annual mileage affect auto insurance rates?
Annual mileage does affect auto insurance quotes, and insurance companies will ask you to estimate your mileage when giving you a quote. Those who drive less frequently are assigned cheaper rates, since they pose less risk. Some insurance companies offer low mileage discounts.
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Daniel Walker
Licensed Auto Insurance Agent
Daniel Walker graduated with a BS in Administrative Management in 2005 and has run his family’s insurance agency, FCI Agency, for over 15 years (BBB A+). He is licensed as an insurance agent to write property and casualty insurance, including home, life, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. To ensure our content is accura...
Licensed Auto Insurance Agent
UPDATED: Oct 13, 2023
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Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Oct 13, 2023
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
- Auto insurance companies determine risk levels and premiums based on annual mileage estimates
- You should carefully estimate your driving needs for the upcoming year when you apply for coverage
- You may be able to qualify for low mileage discounts or get pay per mile coverage
Companies may often ask you for your annual mileage before giving you their rate quote when you apply for auto insurance. Why is this so important? What does “annual mileage” mean? And how do you calculate your mileage? Are there ways to get cheaper insurance based on your driving expectations? We understand that price is often a key consideration and have researched the subject to provide you with answers below.
How does annual mileage affect auto insurance?
Some insurance companies want to know how many miles you will drive in the first year before extending coverage. This information is one of the factors that they use to help set insurance rates. Insurance companies extend protection, but they must calculate your potential risk.
As insurance is all about risk, these companies conclude that the more miles you drive in a given year, the higher the potential for an accident and accompanying claim.
You may consider yourself a very safe driver, but accidents can still happen, and you can’t always account for other motorists.
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What does annual mileage mean?
“Annual mileage” is the number of miles you are likely to cover over twelve months, including commuting and leisure trips. Insurance companies understand that you cannot predict the actual number of miles you will drive in 12 months, so they are willing to accept an estimation.
If your circumstances change and you will likely drive more than you had thought when applying for the policy, get in touch with the company to adjust the number.
How to Calculate Your Estimated Mileage
Before applying for coverage, determine how many miles you will likely drive in the next 12 months. You can base your information on the previous 12-month period and make any adjustments if you think it will change. If your driving pattern is quite consistent, you can reset your vehicle’s odometer/trip meter to zero and record your actual mileage for the next week or month to use as a guide.
You can also refer to your vehicle’s service history, where the service coordinator typically records your mileage when you visit the shop.
Why You Should Never Knowingly Underestimate
Always be as accurate as possible when supplying estimated mileage to an insurance company. Some people may purposely underestimate their mileage to get a lower premium, but this could backfire. After all, the company could check your actual odometer reading following an accident.
They may also refer to records kept during an annual safety inspection. If insurance companies have access to a state database, they can estimate the average number of miles you drive. Should they find any anomalies, this could lead to higher premiums.
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Can you pay for insurance based on usage?
Some companies may offer a policy based on payment per mile. In other words, your premiums will be based on usage with a smaller base rate every month and an adjustment for the number of miles that you drive. Compare your options to see if this type of policy would work for you.
Can you qualify for low mileage discounts?
If you believe that you will travel far fewer miles than the average driver, you may get a low mileage discount on your car insurance. In addition, the insurance company may give you a device to track your mileage over the next month.
The Bottom Line on How Annual Mileage Affects Auto Insurance Rates
The number of miles you drive each year will affect the amount of money you pay for insurance coverage. Your auto insurance company may determine that the more you are on the road, the greater the risk you pose and then adjust your rate accordingly.
You should do your best to estimate your annual mileage as accurately as possible. And keep in mind that you may be able to get low mileage discounts in some cases or apply for “pay per mile” coverage.
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Frequently Asked Questions
Does the number of miles I drive in a year affect my auto insurance rates?
Yes, the number of miles you drive in a year can affect your auto insurance rates. Insurance companies often consider annual mileage as one of the factors when determining the cost of your car insurance policy.
How does annual mileage impact auto insurance rates?
The impact of annual mileage on auto insurance rates varies among insurance providers. Generally, the more miles you drive in a year, the higher the risk of being involved in accidents or experiencing damages, which can result in higher insurance premiums. However, insurance companies may have different mileage thresholds or pricing tiers that can affect the rate increase.
Is there a specific mileage threshold that affects my insurance rates?
The specific mileage threshold that affects insurance rates can vary among insurance companies. Some providers have predefined mileage ranges or categories that influence premiums, such as 0-7,500 miles, 7,501-10,000 miles, or 10,001-15,000 miles per year. These thresholds may differ, so it’s best to check with your insurance company for their specific guidelines.
How do insurance companies determine my annual mileage?
Insurance companies typically rely on several methods to determine your annual mileage. These methods may include self-reporting, where you estimate your mileage when obtaining a quote or renewing your policy. Some insurers may also use telematics devices or smartphone apps to track your driving habits and calculate your mileage accurately.
What if my annual mileage changes during the policy term?
If your annual mileage changes significantly during your policy term, it’s important to notify your insurance company. Adjusting your mileage estimate can help ensure your policy accurately reflects your driving habits. Failing to update your mileage could result in potential issues, such as claim disputes or policy cancellation.
Are there any insurance discounts available for low mileage drivers?
Yes, many insurance companies offer discounts for low mileage drivers. These discounts are often known as “low mileage discounts” or “usage-based insurance.” If you drive fewer miles than the average driver, you may qualify for a reduced premium. The eligibility criteria and discount amounts may vary, so it’s advisable to inquire with your insurance provider about any available discounts.
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Daniel Walker
Licensed Auto Insurance Agent
Daniel Walker graduated with a BS in Administrative Management in 2005 and has run his family’s insurance agency, FCI Agency, for over 15 years (BBB A+). He is licensed as an insurance agent to write property and casualty insurance, including home, life, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. To ensure our content is accura...
Licensed Auto Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.