Why Do Insurers Ask for Your Annual Mileage?

When shopping for auto insurance, one of the key details insurers ask about is your annual mileage. While it might seem like a straightforward query, your response can significantly influence your insurance premiums. In this blog, we’ll discuss why insurers ask for this information, highlight ways to lower your mileage, and explore available discounts for motorists who drive less often.

Why Your Mileage Matters

1. Risk Assessment: More Miles, More Risk

The primary reason insurers ask about your annual mileage is for risk assessment. Insurance companies calculate premiums based on the likelihood of a driver filing a claim, and the more you drive, the higher your risk of being involved in an accident. 

Simply put, the more time you spend on the road, the more opportunities there are for something to go wrong, whether it’s a collision, a fender bender, or damage caused by road debris. High-mileage drivers are statistically more likely to encounter hazards such as congested traffic, unpredictable weather conditions, or other road users making mistakes. This elevated exposure translates to a higher risk profile, which in turn results in increased insurance premiums. Conversely, if you drive fewer miles, your risk of being involved in an accident decreases, leading insurers to potentially offer lower rates.

Understanding how your annual mileage affects your insurance costs can be a powerful motivator for managing your driving habits. For example, if you can reduce your yearly mileage, you may be able to qualify for low-mileage discounts, which some insurers offer as an incentive for driving less.

2. Vehicle Wear and Tear: The Hidden Costs of High Mileage

Another key factor that insurers consider when evaluating your annual mileage is vehicle wear and tear. Cars driven more frequently or over long distances endure more stress and require more maintenance and repairs over time. High-mileage vehicles often face issues such as tire wear, brake degradation, and more frequent oil changes, all of which can add up to significant expenses.

Additionally, cars with higher mileage tend to depreciate faster. Depreciation is the loss of a vehicle’s value over time, and the more a car is driven, the quicker it depreciates. This depreciation not only affects your car's resale value but also influences the amount your insurance provider will pay out in the event of a total loss claim. Insurers consider vehicles with higher mileage to be worth less, which can impact the type of coverage they recommend or the payouts for which you may be eligible.

For instance, if you drive your vehicle extensively for work, leisure, or long commutes, you may notice your car requires more frequent trips to the mechanic. This affects your wallet and insurance profile, as insurers consider the likelihood of a vehicle’s increased wear and tear when determining your premiums. 

High-mileage drivers may also be subject to more stringent vehicle maintenance requirements to qualify for certain insurance policies, further emphasizing the connection between mileage and overall vehicle upkeep.

3. Work-Related Use: Consider Commercial Auto Insurance

For individuals who use their vehicles for work purposes, annual mileage can be significantly higher than the average driver. Whether you’re a sales representative travelling between clients, a delivery driver, or a small business owner using your car to transport goods, the extra miles add up quickly. In these cases, it’s important to consider whether your current auto insurance policy provides adequate coverage for work-related use.

Standard personal auto insurance policies are typically designed for personal, non-commercial use and may not fully cover incidents that occur while the vehicle is being used for business purposes. If work-related driving is a significant part of your annual mileage, you might need to explore commercial auto insurance. Commercial auto policies are tailored to cover the specific risks associated with business use, including higher mileage, and often provide broader liability coverage, which is crucial if an accident occurs during business operations.

Failing to disclose work-related use of your vehicle to your insurer can lead to denied claims and even policy cancellations, as it constitutes a misrepresentation of your risk profile. To ensure that you’re properly protected, accurately report your vehicle’s usage and consider the appropriate type of coverage for your needs.

Ways to Lower Your Mileage and Save on Insurance

If you’re looking to reduce your insurance costs, lowering your annual mileage is a practical approach. Here are some strategies to help you cut down on your driving and potentially qualify for low-mileage discounts:

1. Carpool or Use Public Transportation

Sharing rides with colleagues or using public transportation can significantly reduce the number of miles you put on your vehicle. Not only does this save you money on fuel and maintenance, but it also contributes to lower insurance premiums if you can reduce your overall mileage.

2. Work from Home

If your job allows it, working from home even a few days a week can substantially decrease your annual mileage. Many insurers recognize the growing trend of remote work and may offer discounts to drivers who commute less frequently.

3. Plan Your Trips Efficiently

Combine errands into a single trip instead of making multiple short journeys. This not only helps lower your mileage but also saves time and reduces fuel consumption. It could also help you avoid situations where accidents are more likely to happen - you won’t need to make sudden late-night drives for food or medicine or leave the house for supplies in bad weather.

4. Use Alternative Transportation

For short trips, consider walking or biking. These alternatives not only contribute to a healthier lifestyle but also keep your car off the road, reducing wear and tear.

5. Monitor Your Mileage

Keep track of your odometer readings and stay aware of how much you’re driving. Some insurers offer usage-based insurance programs that use telematics devices or smartphone apps to monitor your driving habits, offering discounts based on low mileage and safe driving behaviour.

Discounts for Low-Mileage Drivers

Insurers often provide discounts to drivers who maintain lower annual mileage, as this reduces their risk exposure. These discounts can range from 5% to 20% off your premium, depending on the insurer and the amount of driving you do. By actively managing your mileage and driving habits, you can make yourself eligible for these savings.

Low-mileage discounts are particularly beneficial for retirees, remote workers, and individuals who live in urban areas with accessible public transportation options. If you find that your driving habits have changed significantly - such as driving less due to retirement or a shift to remote work - it’s worth revisiting your insurance policy to see if you qualify for reduced rates.

Contact BIG Now

Understanding your annual mileage is crucial when it comes to auto insurance coverage and costs. Whether you're driving less due to lifestyle changes or using your vehicle for work, having the right car insurance policy can make all the difference. 

Speak with one of our expert brokers today to explore coverage options tailored to your driving habits, and discover potential savings with low-mileage discounts. Contact us now or request an auto insurance quote online to get started.