Do any auto insurance companies offer discounts for driving very little?
Zach in Rhode Island asks us this question – “Are there any discounts out there for drivers who don’t drive that much?”
Insurance Panda answers:
Drivers are always looking for a way to lower auto costs. Having a car can be expensive. When you factor in how much you pay for auto insurance, general repair and those occasional emergency trips to the mechanic, as well as gas, it’s very easy to spend thousands of dollars each year just on transportation. That’s why many people are finding new ways to save money. Carpooling has become extremely popular and public transportation has experienced a resurgence of travelers. If you don’t use your car very often, make sure you let your insurance company know. You could also be saving money on your car insurance. It depends on who provides your insurance.
But do any car insurance companies offer discounts for driving very little? Can you really save money on car insurance if you stay off the road? Do people who work from home save money on car insurance?
The answer to all of these questions is – sometimes!
It’s true: many car insurance companies in the United States offer discounts for drivers who drive very little. These discounts are typically called low mileage discounts. Some insurance companies refer to it as usage-based insurance, or UBI. Some people also call it pay-as-you-go or pay-as-you-drive insurance.
If you work from home, or if you don’t commute to work on a regular basis, then you may be eligible for a low mileage discount or usage-based insurance.
How To Secure A Low Mileage Discount
There are generally three ways to secure a low mileage discount, including:
Estimate your Mileage When You Enroll
When you request a car insurance quote, your insurance company will ask you to estimate your annual mileage. Typically, your insurance company will take your word for it. That’s because most insurance companies don’t offer insurance discounts unless you’re driving say, fewer than 7,000 miles per year. Even then, you might have to use a tracker to confirm that low mileage. Otherwise, it’s easy for anyone to claim they drive fewer than 7,000 miles per year.
Let Insurance Companies Measure Your Driving
If you’re concerned about your privacy, then this step may not be for you. Some insurance companies will require you to track your mileage to qualify for a low mileage discount. The insurance company will place a reporting device in your vehicle. Then, you’ll qualify for a pay as you drive program. Sometimes, you’re required to leave the reporting device in your vehicle permanently. In other cases, your insurance company will only require you to do this once.
Pay By the Mile
A rare number of insurance companies let you save money with “pay by the mile” programs. Currently, only one major insurance company offers a pay by the mile program: Metromile, and they’re only available in seven states.
How Much Can You Save?
Low mileage discounts vary widely across the country. In some states, you’ll save just 2% when you drive fewer than 7,000 miles per year, for example.
In other states, you can save as much as 20% when you qualify for a low mileage discount.
Drivers in Hawaii, for example, rarely save much money with low mileage discounts because you rarely have to drive far in Hawaii. Drivers in California, however, can save as much as 20% with a low mileage discount.
Some insurance companies will also advertise savings of 30% to 50% for usage-based insurance. However, true usage-based insurance takes into account factors beyond just your mileage – like the times of day at which you drive.
Currently, only a few insurance companies offer discounts for less driving, often known as pay-as-you-go programs. Of course, not everyone likes what you have to do to save money. For example, Progressive Insurance offers a pay-as-you-drive program that requires participants to install a device below the steering wheel. This monitors how much you drive as well as your acceleration and braking. You also have to pay $5 per month. The insurance company then receives information and will either charge you less or extra. Don’t like the idea of a device monitoring your driving habits? It could be worth it. Some drivers have seen discounts of 30% and you can opt out of the program at any time. If you’re seriously considering participating in a program like this, consider your driving habits. Even if you don’t drive often, you can still be a bad driver. Installing a monitoring device may not be a good idea. Check with your insurance company to see if a similar program is offered and what the stipulations are. If it’s not offered, take your time to compare other insurance companies to see how switching could save you money.