Car Insurance Companies Offer Discounts for Low Mileage

By: David Schneider, Car Insurance Expert
CheaperCarInsurance.com

You may not know this, but if you drive fewer than average miles in a year, you may qualify for significant savings with many car insurance companies. Called a Low Mileage Discount, many car insurance companies offer discounts such as this to drivers who fall below a certain threshold for mileage.

For many companies, that number of miles is 7,500. If a driver drives fewer than 7,500 miles a year, he can save anywhere from 10 to 20% on his car insurance policy.

Reasons for the Discount

Not sure why driving less would entitle you to savings? Car insurance companies figure that with you driving on the road less, you are less likely to get in a car accident. And the less likely you are to be in a collision, the better the risk you are as a policyholder for that company.

There are, of course, other benefits to driving less:

• You don’t spend as much money on gas
• Your car doesn’t put out as many harmful emissions into the atmosphere
• You take advantage of other forms of transportation like walking, biking or public transportation.
• Your car needs maintenance and repair less frequently.
• Your car will last longer and retain its value longer.

How Mileage is Calculated

For some car insurance companies, they go by the honor system and simply ask drivers how many miles they drive each year. For others, they use in-car monitoring systems like OnStar, which can record how many miles a car drives. Other companies may request policyholders to visit authorized auto repair shops that can record a car’s mileage and report back to the car insurance companies.

Discounts can be calculated based on any of these methods.

Who’s Participating?

Expect to see more companies rolling out a low mileage discount program in the future, but here’s a sampling of who’s doing it well currently:

• Progressive’s “MyRate” program is currently available only in a handful of states. Participants get 25% off their rate if they install a monitoring device to track driving habits.
• GMAC offers qualified OnStar subscribers up to 50% off their car insurance rate if they drive 15,000 miles or less annually.
• State Farm offers discounts of 12 to 18% for drivers who rack up under 7,500 miles a year.

If you participate in a Low Mileage Program, you can expect to save on average $50 to $150 a year off the cost of your premium. Keep in mind you will realize other savings, such as spending less on gas, maintenance and upkeep of your vehicle.

I Want to Get the Discount!

If you’re not currently getting a low mileage discount, check with your insurance agent to see if your company offers one. If they do not, hop on our Quote page and get instant quotes from multiple car insurance companies. Simply indicate that you drive fewer than 7,500 and see what sort of low mileage discounts the different car insurance companies offer you.

Some will offer bigger discounts than others, but you don’t necessarily want to go with the lowest price. Do some research first to learn about the customer service ratings of each company as well as see what other policyholders have to say about the companies. Make your decision based on several factors, including price, discount, coverage, benefits and customer service.

Get started now! Just click the Get a Quote button at the top of the page to get several car insurance quotes from multiple car insurance companies delivered to your inbox in minutes. You’ll be glad you did!

Posted: January 08, 2010