Low Mileage Discount

Do you consider yourself a homebody? Do you live relatively close to where you work? If so, you may qualify for a low mileage discount on your auto insurance rates.

Learn about low mileage discounts, which can help you maintain legally valid coverage while potentially reducing your car insurance costs.

Auto Insurance Discounts Explained

Most car insurance companies decide on rates by evaluating individual motorist information to determine how much of a claim risk you pose. When insurers calculate your risk, they rely on complex formulas that account for different kinds of data (including your mileage), collectively referred to as rating factors.

For instance, your rates will be higher if the type of vehicle you drive is popular with thieves, or if you live in a high-traffic area, which increases your likelihood of collision. Conversely, you'll pay lower premiums by way of insurance discounts if you exhibit low-risk characteristics, like having a clean driving record and living in a safe neighborhood.

What Is the Low Mileage Discount?

Many insurance companies regard how often AND how far you drive as important rating factors. If you're out on the road less, you're less likely to be involved in an accident—therefore, you're less likely to file a claim that your insurer must pay.

Low mileage discounts benefit vehicle owners who don't drive very far each year. If your annual mileage falls beneath the average for similar motorists, you could receive noteworthy price breaks for being less of a financial risk to your auto insurance provider.

How Do You Obtain a Low Mileage Discount?

Keep in mind, not all auto insurance companies provide low mileage discounts.

Drivers in some states, like North Carolina, may not be eligible at all due to how statewide rate-setting bureaus and other insurance laws function. In other states, like California, there are laws mandating that car insurance providers use mileage as a rating factor. Make sure to do some research on your own state's policies regarding low mileage discounts.

If you reside in a state where car insurance providers offer price breaks for low mileage, you'll need to formally request that the discount is added to your policy. Insurers usually determine low mileage by a set limit, usually around 5,000 or 7,500 miles per year. This annual mileage cap varies, so always investigate the terms and fine print before signing up for a policy.

Maintaining Your Discount Eligibility

What happens if you go over your mileage limit? Your insurer may not revoke your low mileage discount if you only exceed the cap by a small amount, but there will only be so much leeway.

If you received a low mileage discount and a change in circumstances will cause you to drive a lot more than before, you must notify your insurance provider. Those who do not may get accused of insurance fraud if their provider checks the odometer while processing a claim or renewing a policy.