Low Mileage Car Insurance

Can Low-Mileage Drivers Save Money on Car Insurance?

Do you drive as little as before? People who don't drive as much may be able to get cheaper car insurance, but they might have to look outside of normal policies to find real discounts.

We'll talk about some of the best ways to save money on car insurance as a low-mileage driver. These include pay-per-mile car insurance, telematics, and simple low mileage rates.

What is considered Low-Mileage?

Most insurance companies call someone who goes between 0 and 7,500 miles a year a "low-mileage driver." Most people who buy insurance are automatically given a rate based on the normal U.S. annual mileage of 12,000. Some drivers, though, go much farther than 12,000 miles a year.

This is a rough idea of how much car insurance costs change based on how many miles you drive. People who drive less than 7,500 miles a year pay an average of $86 less for car insurance than people who drive more than 15,000 miles a year. But savings are different in each state.

This is because low mileage rates rely on the insurance rules in each state. In California, a driver with low mileage will save more money than a driver in Texas who doesn't drive very often.

What are the Best Insurance Options for Low-Mileage Drivers?

There are three popular ways for people who drive low-mileage cars to find cheap car insurance: 

• Discounts for low mileage
• Telematics and usage-based insurance
• Pay-per-mile Insurance

First, drivers may choose to sign up for a standard car insurance company's low-mileage discount. This is a regular way for many major insurers to offer discounts. Let's start by looking at this choice.

Option 1: Standard Insurance with a Low-Mileage Discount

We looked into the best car insurance companies and found that USAA and State Farm offer the best deals for drivers who only put a few miles on their cars.

Using the driver description from our method, we checked with eight major insurance companies to see which one had the cheapest rates for drivers with low mileage. Check out the table below to see how much these businesses charge on average for annual mileage.

Option 2: Usage-Based Insurance (Telematics)

Usage-based insurance (UBI) is usually calculated by a smartphone app or a device in your car that tracks your car's mileage and your driving habits, including hard braking, speeding up, being busy, and more. This is usually called telematics.

It's becoming increasingly common for insurance companies to offer discounts to safe drivers who don't drive too much. Most of them start with a set rate that is then changed based on how you drive. They can then better guess what kind of customer you will be and set your fee accordingly.

Option 3: Pay-Per-Mile Car Insurance

If you don't drive very much, you can also get car insurance from companies that charge you by the mile. This is helpful because it means you only pay for the insurance you need. This is a "pay as you go" (or "pay as you drive") type of car insurance that looks at how much you drive along with more standard factors like your credit score, age, whether you own your home, and where you live.

There are many companies that offer telematics services, but not all of them pay per mile. Metromile works on a real "pay-as-you-go" system, which we'll discuss quickly below. Don't forget that pay-per-mile car insurance might not be offered in all states.

Pay-Per-Mile Car Insurance Companies

How to Find Insurance as a Low-Mileage Driver?

If you want car insurance with low mileage, look for programs designed to help people like you. As we've seen, if you don't look into a specific UBI scheme, the only real low mileage discount you are likely to get is if you live in California. Besides that, there aren't many saves. Many big car insurance companies have telematic programs. Nationwide and Metromile are two good examples of true pay-per-mile programs.