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Auto Insurance

What’s the Best Car Insurance for Low-Mileage Drivers?

Driving fewer miles provides cost savings through lower fuel and maintenance costs. Driving fewer-than-average miles may also earn you an auto insurance premium discount. Several low-mileage car insurance policies help you get the lowest possible auto insurance premiums. Read on to learn more.

Low Mileage Drivers

Driving fewer miles may provide cost savings in the form of lower maintenance costs and may also earn you an auto insurance premium discount. 

Insurance companies understand that numerous factors, including traveling fewer miles and your driving habits, like whether you tend to speed or engage in hard braking, affect your statistical likelihood of being in an accident. Some companies reward drivers who put fewer miles on their cars and those with safe driving habits with premium discounts built into policies that cater to the needs of low-mileage drivers.  

What Is Considered Low Mileage For Car Insurance?

Many insurers provide an auto insurance premium discount for those who drive fewer than 12,000 annually, while some require fewer than 7,500 miles annually. Each insurance company decides how to qualify a low-mileage driver. 

Insurers use algorithms with numerous data points to determine insurance premiums for individual drivers. One criterion they use is how many miles you drive per year. While many insurers ask drivers to estimate their mileage, some provide significant discounts if the driver agrees to install a telematics device in the vehicle or download an app to keep track of mileage. 

Depending on how far you drive each year, a policy designed for low-mileage drivers may be less expensive than a standard auto policy. 

Why Consider Changing to Low Mileage Car Insurance? 

Premium discounts are a big reason that many drivers choose low-mileage car insurance. Low-mileage car insurance provides the same coverage options as a standard auto insurance policy. You can choose a basic liability policy that meets your state’s minimum standards or opt for a full coverage policy that includes comprehensive and collision coverage

Low-mileage insurers often offer popular endorsements and add-ons, including roadside assistance and rental car coverage or reimbursement. Insurers understand that less time on the road may translate to fewer accident claims, which could translate to a premium discount for low-mileage drivers. 

Since each insurer sets premiums for various policy offerings, getting personalized quotes from multiple insurance companies is crucial before deciding whether to proceed with a low-mileage car insurance policy. 

Low-Mileage Discounts With Standard Policies

A standard auto policy may have a built-in low mileage option with a discount for drivers who typically put fewer than average miles on their vehicles. If your annual mileage changes, it’s crucial to contact your agent to find out whether you may be eligible for a premium discount.

Your insurer may not advertise low-mileage discounts, but many companies offer lower premiums for drivers who travel fewer miles. You may be required to self-report mileage with a photo of the car’s odometer reading when their policy renews to get a low-mileage discount. 

Who Should Consider This Option?

You should consider finding low-mileage car insurance discounts if:

  • You recently started working from home
  • You’re newly retired
  • You’ve moved, and your commute is shorter
  • You’ve experienced any life-changing event that reduces how much you drive daily

If you’re unsure whether these situations apply to you, speak with an insurance agent to confirm your eligibility.

Pay-per-Mile Insurance

Pay-per-mile insurance, also called pay-as-you-go insurance, provides the same coverage options as a standard auto policy, with a premium based on how far you drive. 

With a pay-per-mile insurance policy, the driver commits to a base insurance premium and then pays a specific flat rate for each mile they drive during a policy period. Insurers may track mileage through a device that plugs directly into the insured vehicle’s onboard diagnostics (OBD) port, or they may ask the driver to regularly snap a photo of the car’s odometer and upload it into the company’s app. Pay-per-mile policies may recalculate a driver’s premiums every month. 

While paying for auto insurance on a per-mile basis may sound risky, pay-per-mile policies typically have a ceiling of billable miles per day, so an occasional road trip may not result in a significant auto insurance bill. 

How Does This Compare to Standard Auto Insurance? 

With a pay-per-mile policy, the insurer tracks your mileage and bills you per mile in addition to your base rate, so how much (or how little) you drive directly affects your insurance bill each month. 

Standard auto policies base premiums on an estimate of how far the insured person drives each year. Both standard and pay-per-mile insurance base rates in part on information about the driver and their vehicle, including the type of vehicle, where the car is stored, and the age and sex of the driver. 

Who Should Consider This Option? 

Pay-per-mile auto insurance policies may be a good fit for people who work from home, are retired, or don’t drive much. People who drive very little may take advantage of significant auto insurance discounts if they are willing to track their mileage and report it to the insurer at regular intervals. 

Usage-based Car Insurance and Telematics 

With usage-based or telematics car insurance, you can get a discount on car insurance if your driving habits are safer than a typical driver’s and if you drive fewer miles than average. The insurer may use a tracking device that plugs into your car’s diagnostic port, use information gathered from OnStar, or ask you to install an app on your phone that sends data back to the company. Depending on the insurer, you may be able to choose the telematics device you use. 

The time of day you typically drive, whether you accelerate and brake gently, and where you drive may all impact your insurance rates. If the insurer determines your risk of being involved in an accident is lower than the average driver, you may receive a premium discount. 

How Does This Compare to Standard Auto Insurance?

Standard auto insurance uses much of the same information as telematics. Still, they collect it from state Department of Motor Vehicle (DMV) records or LexisNexis, a private company that provides information to help insurance companies determine risk. 

While usage-based car insurance or telematics may also use these sources to help set premiums, they also use information about the insured driver’s habits and mileage to provide individualized discounts. However, if data collected via telematics shows that a driver’s habits put them at risk of being in an accident, the insurer may charge higher premiums. 

Who Should Consider This Option? 

To get a discount via telematics, drivers must generally drive fewer miles than average, avoid cornering, hard braking, and fast acceleration, and avoid driving late at night and during rush-hour traffic. 

Stay-at-home parents, retirees, and remote workers may be ideal candidates for usage-based and telematics auto insurance. 

Non-owner Car Insurance

If you regularly drive, but don’t own a car and aren’t required to be listed on an auto insurance policy, a non-owner insurance policy, also called non-drivers insurance, could be a good choice. 

Non-owner car insurance provides liability coverage when you drive a vehicle you do not own.

Suppose you are involved in an accident and are legally liable for third-party property damage or bodily injuries. In that case, your non-owner car insurance policy helps cover the damage up to the policy’s limits. 

A non-owner insurance policy may also provide coverage for:

  • Uninsured or underinsured motorist liability
  • Personal injury protection (PIP) or Medical payments (MedPay) 
  • Rental car liability coverage

How Does This Compare to Standard Auto Insurance?

With standard car insurance, you insure a vehicle and can choose to add collision and comprehensive coverage to help cover the costs of repairing or replacing the car after an accident. Non-owner insurance follows the driver, not the vehicle. It does not provide coverage for anyone other than the listed driver and does not provide collision or comprehensive insurance

Who Should Consider This Option?

Non-owner auto insurance may be ideal if you are legally required to purchase the minimum liability coverage required by your state but don’t own a car. If you are required to file an SR-22 form with the state, you regularly rent or borrow cars, or if you are not driving for an extended amount of time but need to maintain continuous coverage, non-owner insurance may be a good fit.