Understanding How Mileage Affects Your Auto Insurance

Understanding How Mileage Affects Your Auto Insurance

The insurance industry is like a complex puzzle for many people who explore it only to wonder about missing pieces. Why are auto insurance rates different for everyone? One reason is rates are based on how much you drive. Is there an insurance mileage limit? No, but it’s still a good idea to track your mileage since it affects your monthly premium.

Can mileage affect car insurance?

When you apply for auto insurance, one of the questions on the application asks how many miles you drive per year. The agency might ask the question again periodically in the future to adjust your rate. The distance matters to the insurer because it considers that the more you drive on the road, the more risk exists for filing accident claims.

Again, insurance policies have no insurance mileage limit, but you need to calculate an estimate to complete the application. You are not bound to keep miles under your estimate, but let your insurer know if it changes. Those who deliberately and drastically underestimate mileage on an auto insurance application to save money can face fraud penalties.

More mileage, higher rates

Another reason driving more miles equates to higher insurance rates is that it creates more wear and tear. The more worn your tires and other auto parts are, the greater the risk of an accident. Putting minimal miles on your car each month shows your insurer that you’re a low-risk customer.

Some insurance companies offer usage-based insurance coverage, in which lower premiums correlate with low mileage. In some usage-based policies, the insurance company can install a vehicle’s wireless device that tracks driving behavior and mileage data.

Are low-mileage drivers eligible for discounts?

Insurance agencies award discounts to low-mileage drivers because they present lower risks of filing accident claims. People don’t drive much for various reasons, such as preferring alternative transportation to cut fuel and insurance costs. Some people drive less because they enjoy walking or want to help reduce pollution and traffic congestion.

Moreover, insurance discounts can be awarded for a good driving record or for bundling different insurance policies.

Mileage limits for rental cars

Mileage limits somewhat pertain to rental cars, but it’s typically based on the user’s needs, as agreed upon by the rental agency before granting access to the vehicle. If you stay within the state, rental companies allow unlimited miles, and charges can be added for exceeding predetermined mileage.

Get the right auto insurance coverage today!

While you don’t have to worry about an insurance mileage limit, it’s still important to periodically check your mileage if you want to cut insurance costs. Be aware of how far you drive and how often. Contact our experts at CAV Insurance Agency to get the auto insurance coverage you need today.

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