Car Insurance for Low Mileage Vehicles
The insurance rates and premiums that you’re provided are based on risk. The higher the risk your auto insurance company perceives you as, the higher they’ll charge you in premiums, and similarly, the lower the risk you present to them, the more you stand to gain. This is why those who enter into low mileage insurance coverage plans can save a lot more than those who drive less but unknowingly and unnecessarily select “standard” mileage insurance policies.
What Is Low Mileage?
Though this definition will change with each policy and company, a vehicle that’s “low mileage” is generally one that travels anywhere from 7,500 to 15,000 miles per year. In fact, according to a recent George Washington University study, an increasing number of Americans are driving less each year, with drivers in the study averaging only 13,476 miles per year, or 37 miles a day.
Not sure if you’re one of those “low mileage” drivers? Take these lifestyle factors into account:
- You’re a retired senior driver no longer commuting to and from work in your personal vehicle.
- You moved to a location closer to your work, or have started a home-based business.
- You join a car pool and no longer drive to work five days a week.
Low Mileage Insurance Discounts
Most insurance companies will offer one of two (if not both) low mileage car insurance policy options:
- Usage Based Discounts: If you have good driving habits (i.e. no accidents or tickets) you’ll save considerably.
- Low Mileage Discounts: If your annual mileage falls beneath a certain capped amount, you’ll enjoy an insurance discount.
It’s important for drivers to note that in order to be eligible for a low mileage discount, he or she may need to participate in a usage-based program as outlined above that will track both behavior while driving and mileage.
Pay As You Drive Insurance Programs
One type of insurance policy garnering tons of interest is the usage-based or “pay as you drive” (PAYD) insurance program. With this, drivers can receive a personalized premium by allowing the insurance company to continually monitor and review one’s driving habits. This can result in as much of a 50% discount on premiums. The drawback is, of course, that you’re being continually monitored. In order to qualify, a small telematics device must be affixed to the vehicle that monitors:
- How you drive (i.e. your vehicle’s average speed and how hard you brake)
- How many miles you’re driving
- The time of day which you drive
The goal here is to reward good drivers through statistical data. PAYD policies are just one way to save on insurance. Although they’re relatively new and can offer great benefits, the oldest, tried and true way to continually save is to drive safely.