Drivers who rack up miles on their cars get more bang for their buck when it comes to their auto insurance policies. But what about those who don’t put a lot of miles on their car?
Maybe you have a short commute, live in a pedestrian community, or are a bike fan of sweating it out on your bike. Either way, it stands to reason you should pay less for your insurance since less time on the road equals less risk for insurance companies. Here’s what to do:
The United States Department of Transportation Federal Highway Administration estimates that the average American driver puts around 1,125 miles on their car each month or about 13,500 per year. While this encompasses a wide range of ages, careers, and circumstances, it is also the number that most car insurance companies reference when offering you a rate on your policy.
This means that a low-mileage driver might put 7,500 or fewer miles on their car each year. While each insurance company might gauge this differently, you can expect the cutoff to be around this number.
It may be that your car insurance company doesn’t offer low-mileage savings. In some cases, the savings could be less than you’re hoping for — in California, the difference in annual premiums between low- and high-mileage drivers is just $86 (Martin), though it can also save hundreds of dollars.
Though a relative newcomer to the market, pay-per-mile auto insurance has attracted a fair amount of attention (Norman; Huddleston). This auto insurance model charges the driver a couple of cents per mile driven, plus a monthly base rate — typically around $20 (Fitzpatrick). They install a tiny device that counts miles as you drive, letting them charge you automatically each month. These devices may also monitor safe driving behavior and anomalies like sudden stops.
The catch to these systems is that, if you need to make a road trip or find yourself traveling more, you could start to pay far more than regular premiums. This service may also not be available in your state.
To figure out how to make your low carbon footprint start saving you even more money, follow these steps:
- Contact your current insurance company and ask what they offer.
- Investigate other insurance companies if necessary.
- Figure out whether pay-per-mile insurance would be right for you.
Stay safe on the road and continue those low-mileage driving habits.
- US Department of Transportation. “Average Annual Miles per Driver by Age Group,” Federal Highway Administration, 2020, www.fhwa.dot.gov/ohim/onh00/bar8.htm Accessed 11 Dec 2020.
- Huddleston, Cameron. “How Pay-Per-Mile Auto Insurance Works.” Forbes, Forbes Magazine, 9 Oct 2020, www.forbes.com/advisor/car-insurance/pay-per-mile/. Accessed 11 Dec 2020.