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What is the average annual car mileage?

Fact-checked with HomeInsurance.com

Drivers may not know it, but the amount of miles put on their cars directly affects the amount they pay for their insurance premium. The farther and more frequently you drive your car, the higher your premium will be. Conversely, lower mileage results in a lower monthly payment. But what constitutes ‘low mileage,’ and how much can drivers really save simply by driving less?

Our team took a deep dive into the world of auto insurance to provide you with everything you need to know about how mileage affects car insurance rates. This article explores everything from average vehicular mileage, commuting miles, available discounts and even how COVID-19 has impacted car insurance rates in 2020. 

Why am I asked for my annual mileage?

Were you ever in the middle of applying for car insurance coverage when you suddenly had to make a quick trip to the garage to check your odometer reading? It may seem arbitrary, but there’s a good reason for why insurance carriers ask for your vehicle’s mileage when you fill out your application: the number of miles on your car directly affects the insurance rate.

Some insurance carriers may only request this information once during your initial application process. However, other carriers may request mileage updates throughout the year — especially if you submit a number that’s considered below average. This is also how insurance companies prevent “soft fraud” from policyholders who fudge the number of miles they drive throughout the year to receive low-mileage discounts.

While there aren’t any legal consequences associated with reporting lower miles than you actually have, it can make filing a claim problematic. If you initiate filing a claim with your insurance carrier and an agent sees you’re receiving discounts for low mileage, they may ask for an annual record of reported mileage. If the numbers don’t add up or at least approximately correlate, it could result in a delay or denial of your claim.

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

Many times, insurance carriers may also inquire about the number of miles you use to get to work and back. These are referred to as “commuting miles,” and insurance providers can use these numbers to verify the annual mileage you entered during your application process is accurate. 

Most insurance carriers allow up to 20 miles of travel each way for commuting before insurance rates begin to increase. For example, if you live in northern New Jersey and commute 40 miles total each day, you should be able to avoid increases to your insurance premium. However, central Jersey residents traveling to the same office in New York may have higher insurance rates due to the fact that their commute is nearly double that of North Jersey drivers.

What is considered low mileage for car insurance?

Low mileage designations are largely determined by state laws as well as the specific policies outlined by your car insurance provider. In general, anything less than 12,000 miles per year is considered below average. However, some insurance companies may consider 10,000 miles or less as low annual mileage.

Drivers can potentially receive special discounts if they drive their cars less than what’s considered average. In most cases, the highest discounts are applied to drivers who report an annual mileage between 5,000 and 7,000. However, some insurance companies — such as Travelers — offer usage-based policies that provide discounts as high as 30% for drivers using 13,000 miles or less annually. If you’re someone who drives less than the average person, usage-based programs may be a great way for you to save significantly on your insurance premium.

What is the average annual miles driven per year?

According to the most recent data from the U.S. Department of Transportation’s Federal Highway Administration, the average person in the United States drives approximately 13,500 miles each year. Despite this reported average, most insurance companies still consider average to be around 12,000 miles. 

While 1,500 more miles on your vehicle might not raise your insurance premium by much, it’s still a factor to consider when selecting coverage. If you’re someone who fits into the 13,500 category, it’s worth asking potential auto insurance carriers what its threshold is for ‘average’ mileage to determine the most competitive rates.

How does mileage affect car insurance rates?

Mileage directly impacts your car insurance rates because your odds of getting into a car accident increase the more you drive the vehicle. Where you live is the ultimate factor in determining how significant your savings will be if you drive less each year. The following states provide the highest discounts to drivers who only average 2,000 miles or less:

  • California: 27% savings
  • Maryland: 9% savings
  • Pennsylvania: 9% savings
  • Virginia: 9% savings
  • Alabama: 8% savings
  • Kansas: 8% savings
  • Louisiana: 8% savings
  • Massachusetts: 8% savings

However, even drivers that meet the insurance industry average of 12,000 miles annually can save compared to those who drive 20,000 miles or more. The states in which the greatest savings can be gained are as follows:

  • California: 20%
  • Missouri: 6%
  • West Virginia: 6%

Talk to your insurance carrier to find out what discounts may be available in your region and if you qualify for them based on the amount of miles you drive each year.

Low mileage discounts

If you live in a state where the cost savings for low mileage is significant, you’ll want to ensure the low mileage discount is applied to your premium if available and if you qualify. You can do this by calculating your annual mileage manually or with help from tracking technology, such as telematics devices. 

Once you know how many miles you drive each year, you’ll need to contact your insurance provider to have the discount applied. After your discount is applied, your carrier may check in with you regularly to receive an updated odometer reading. You may even be eligible for a usage-based policy, which can further reduce your insurance premium. In this case, you may be subject to more frequent odometer readings.

Even if your carrier doesn’t require you to provide updated readings throughout the year, you’ll need to provide your mileage updates each time you renew your policy in order to maintain your discount status. Overall, you can potentially save between 5% and 25% on your premium with a low mileage discount.

COVID-19’s impact on commuting miles and car insurance

Since the COVID-19 outbreak, many companies have been forced to shut down in-person operations and have employees work from home. Additionally, many people have lost their jobs altogether and no longer travel as much as they previously did. For this reason, the Consumer Federation of America and the Center for Economic Justice urged car insurance companies to offer premium relief for policyholders. Some companies do not offer premium relief in-full, and in addition, temporary low-mileage discounts can be difficult to obtain.

If you are only temporarily working from home and are expected to return to work within a few weeks or months, it may not be possible for auto insurance providers to offer a discount for such a short period of time. While mileage discounts are considered during the initial sale of a policy, it’s difficult for carriers to compute a discounted price for short periods of time.

However, if you anticipate that you’ll be working from home for a much longer timeframe, it may be worth it to explore low-mileage discounts with your provider and obtain a new policy. Consult with your carrier to understand what options may be available in your region so you can get the relief you need during this critical time.

Usage-based insurance

If you drive consistently below the average annual mileage, usage-based insurance programs may be a great option. Savings through such programs can be much higher since they require more frequent check-ins with your provider regarding the number of miles you travel. 

During enrollment in such programs, drivers will either be given a tool to hook up in their vehicles to automatically track mileage (similar to safe driving tools used for safe driving discounts), or they will need to provide their odometer readings to their providers over the phone at regularly scheduled intervals.

If you know your driving habits are on the low end, this may be a viable option for you. However, if your driving habits fluctuate, such a program may not work in your favor. Usage-based programs usually follow a pre-calculated structure, meaning the odometer readings during each check-in must either match or be below the number your insurance carrier calculated from the moment you chose to join the program. If you go over, you may not be able to continue receiving the discount. Consult with your carrier to determine the best option based on your driving history.

How to save on your car insurance quote

In addition to lowering your mileage, you can also find savings by taking advantage of safe driver programs that provide savings based on your driving behavior. This usually involves installing a tool that monitors your driving and reports data back to your insurance carrier. 

You can also qualify for discounts based on whether or not you hold multiple policies with the same provider. Multi-policy discounts (bundles) combine more than one insurance policy and offer both at a discounted rate to help policyholders save money.

Some insurance carriers also offer discounts for military members, seniors and good students. Be sure to do your research and find out what discounts your insurance carrier offers so you can take advantage and lower your premium.

The takeaway

  • Lower mileage results in a lower car insurance premium.
  • Some insurance carriers offer low-mileage discounts and usage-based programs to help drivers save even more on their coverage.
  • The significance of your low-mileage discount depends on where you live in the United States and which insurance carrier you have.
  • In addition to lowering your mileage, you can save on your car insurance quote by bundling policies, participating in a safe driving program or exploring other available discounts through your provider.

Conclusion

Just by driving less, policyholders can save significantly on their annual insurance premiums. In addition to offering customers a lower rate for driving less, some insurance carriers may provide a low-mileage discount for their policyholders. If you can’t take advantage of low-mileage discounts, you may be able to find savings through safe driver programs and other savings opportunities offered by your carrier. Always do your research and discuss your options with your provider so you can secure the best rate for your coverage needs.

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