How Does Mileage Affect Auto Insurance Rates

Are you thinking of buying car insurance? Before going down that road, you should know all the factors affecting car insurance rates. The insurance companies take a lot of factors into consideration before suggesting the insurance rates. From your age, credit history to your yearly mileage, everything is taken into consideration.

Yes, your yearly mileage does affect your car insurance rates. You must be thinking how does mileage affect auto insurance rates? Let me help you with this query. Your car insurance rate is directly related to your yearly mileage. When the mileage of your car goes up, so does the insurance rate. When the mileage of the car goes down, so does the insurance rate. More mileage means you are more on the road with higher chances of getting into an accident. This is considered high risk and is reflected in high rates.

In this article, let us look at the role your yearly mileage plays in your auto insurance rates. Scroll down to find out the answers to all your car insurance mileage-related queries.

Why do Auto Insurance Companies ask for your Yearly Mileage?

Auto insurance companies ask you for your yearly mileage when you buy car insurance. Ever wondered why? This is because your yearly mileage is a major factor in suggesting your car’s insurance rate. As I have told you earlier, the insurance rate and the yearly mileage are directly related.

Keep in mind to give the right estimates as some companies even request to see your mileage checks.  This is usually done when you submit a mileage number that is lower than average. However, if for some reason you have been driving less, you should definitely put in your new reduced mileage. This will help you get lower interest rates.

How to Calculate your car Mileage?

When you are applying for car insurance, you need to determine the estimated miles you will drive in the coming year. This is because your mileage will affect your interest rates.

If you have a consistent driving pattern then you can set the car’s odometer at zero and check the miles driven in the next month. You can use this mileage as a guide and calculate an estimate for your yearly mileage.

If your driving patterns are not consistent then you can estimate your mileage based on the previous year. You can even make adjustments to this information if you think there will be some change in the coming year.

What are the Common Annual Mileage Brackets and How Do They Affect your Insurance Rate?

As we have discussed, your yearly mileage plays a big role in determining your insurance rates. Auto insurance companies set mileage brackets to determine the insurance rates. Let us have a look at some common annual mileage brackets that are followed by most companies:

  • 5000 miles: Best rates
  • 7500 miles: Increased by 10% from 5000
  • 10000 miles: Increased by 7% from 7500
  • 12000 miles: Increased by 4% from 10000
  • 20000 miles: Increased by 25% from 12000

So, if your car travels more than 20000 miles or more in a year, your insurance cost will be 36% more expensive than someone who drives 5000 miles or less annually. 

Can you Pay for Auto Insurance Based on your Usage Instead of Average?

Yes, you can pay for your car insurance based on your usage. This payment of such policy is based on per mile usage. You do not have to pay for the yearly average mileage. If you drive less, then this is a great option for you. The interest rate will be based on the usage and there will be a smaller base rate for each month. If this policy suits you, you can compare the different options that the different companies offer and select the ones that are best for you.

How can you get Low-Mileage Auto Insurance?

You can obtain auto insurance for less interest only if you have low yearly mileage. To reduce your yearly mileage you can follow the steps given below:

  • Keep calculating your average weekly mileage by setting up the odometer to zero. 
  • Use carpool and other public transport to reduce your yearly miles.
  • You can pay via per-mile insurance if your car covers less than 26 miles a week.
  • Check if you qualify for low mileage car insurance.

In this article,  I have covered how your yearly mileage affects your car insurance. The key takeaway for you should be that the more mileage a car has, the more money you need to pay. This is because the more you are driving, the more risk there is for you to get into an accident. So, to get the best offers on car insurance you need to try to reduce your mileage.

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