The United States is seeing a shift in driving habits. Many people, especially in urban areas, are less likely to drive and more dependent on Lyft or Uber for transport. Many people have adapted to remote work, and many of them have eliminated their daily commutes since the pandemic. The best auto insurers found ways to market to this growing segment of infrequent drivers.
The average driving distance in this country is 13,500 per driver. However, insurance companies define low-mileage drivers differently and offer discounts and programs for them.
Who are low-mileage drivers?
According to the Federal Highway Administration in 2018, Americans drove an average 13,476 miles per year. According to the Federal Highway Administration, Americans drove an average of 13,476 miles per year in 2018. Some insurers have a more narrow definition. MileAuto, an insurer that bases its definition on mileage, says that anyone driving less then 10,000 miles per year falls under this category. Nationwide, however, places the low mileage threshold at 8 000 miles each.
Despite the fact that overall driving rates in this country are not declining, it is evident that some groups are finding alternative driving methods. This includes the increasing number of remote workers, urban dwellers who more heavily rely on ridesharing services and stay-at-home parents, as well as retirees. These groups could benefit greatly from a mileage-based premium insurance policy, depending on how much they drive each year.
Low-mileage drivers can get car insurance
The chart below shows that annual mileage does not have a significant impact on annual premiums for traditional automobile insurance. A low-mileage driver who only drives around 2,000 miles per annum will save less than $200 each year, compared to a high-mileage driver who drives more than 20,000 miles annually. Low-mileage insurance, on the other hand, is more affordable for low-mileage drivers. Low-mileage insurance, or a policy that pays per mile, is more likely to provide significant savings for drivers.
Low-mileage drivers: How to get car insurance at a discount
Most insurance companies offer low-mileage car insurance. Car insurance companies assume that drivers who drive less often are less likely to be in an accident. A discount is often worth the reduced risk. Recent developments in mileage- and usage-based policies have rewarded safe and low-mileage drivers with special discounts.
Low-mileage drivers have many savings options:
- Low-mileage discounts: This is an old way to lower premiums. It allows you to drive a minimum amount of miles. This discount is usually based on the driver’s pledge to drive below a certain threshold.
- Use-based discounts – This is a newer technique that telematically measures both mileage and dry-cleaning habits. Discounts may be offered if you drive during non-peak hours. This is generally considered safer.
- Mileage-based policies: Drivers’ miles can be tracked with an app, and premiums can also be calculated based on a base price and an additional amount per mile.
Low-mileage drivers can get car insurance from companies that offer auto insurance
Mileage-based car insurance is worth looking for if you are a low-mileage driver who doesn’t expect to drive long distances for a long time. Some insurers will offer you the chance to lower your rates if your safe driving habits and patterns are met.
Mileage-based insurance typically sets a fixed rate based on common factors such as age, driving record, and vehicle driven. You will be charged a low fee for every mile you drive, which is measured using an app or device provided by the insurer. Below are some examples of car insurance companies making an impact on this market.
Root is the first American car insurance company to use apps. To determine your premium, the app tracks driving habits and miles traveled. Premiums can vary from one month to the next. While safe driving habits, such as avoiding hard braking or rapid acceleration, can keep premiums low and help to keep them low, poor driving habits could lead to higher premiums. Premiums are largely controlled by the driver.
Metromile auto insurance company is pure pay-per mile. Your rate is not tied to how many miles you drive, unlike Root. Metromile doesn’t monitor driving habits. The monthly premium consists of two parts. Base rate is calculated using traditional underwriting principles that consider driving history and other factors. The second component refers to how many miles you drive, which is measured using a company-provided device.
MileAuto , one of the most recent companies in the mile-based insurance industry, is MileAuto . Metromile is the closest company to which it can be compared in setting a base rate for premium using traditional underwriting standards. The monthly premium is adjusted based on the miles driven. MileAuto simplifies this second phase. The insurance company does not require the use of a telematics app or device, but the insured must take a photograph of the vehicle’s odometer at each month’s end.
Milewise by Allstate
Milewise insurance policy is a pay per mile-based policy that brings with it the credibility and resources of an established traditional insurer like Allstate. Milewise also measures driving habits and driving miles using a plug in device. These data are used to set the monthly fluctuating rate. This combined with the traditional base rate sets the premiums. Milewise offers an opportunity to improve driving habits through a feedback loop via its app.
Noblr, like others, assesses driving habits via its mobile app. The data is used to determine monthly premiums. Noblr looks beyond the typical driving patterns and braking habits to determine unique driving patterns. Noblr, for example, assesses risk by reviewing the driver’s driving choices and monitoring cell phone usage in order to discourage texting and driving.