If you’re hoping for a car insurance discount because you or someone else on your policy doesn’t drive much, you better shop around.
Recent research by the nonprofit Consumer Federation of American (CFA) shows that while spending less time behind the wheel lessens your odds of getting into a crash, not all major auto insurers offer significant discounts to low-mileage drivers.
On average, folks outside of California save $30 per year, or 1.6 percent, for every 5,000 fewer miles driven. That’s compared with an average savings of $81, or 8.7 percent, in California — which is an exception because its regulations require insurers to charge lower-mileage drivers less.
Analyzing mileage discounts
For its research, CFA got premium quotes for basic liability coverage in 12 different U.S. cities — one in California, and the rest elsewhere. The quotes were from five large auto insurers:
- State Farm
The quotes all were for a driver with an unblemished record. So, the only differences between quotes, besides the insurers and the cities, was the number of miles driven per year. Annual mileage varied from 2,500 to 22,500.
How the 5 insurers fared
From one insurer to another, low-mileage discounts vary from nonexistent to double digits.
CFA singled out Farmers and Progressive as being particularly stingy in the 11 non-California cities included in CFA’s analysis:
Progressive and Farmers usually charge the same rates to someone who drives only 2,500 miles a year as they charge someone else who drives 22,500 miles a year — nine times as far — all else being equal.
Geico offers “a small price reduction” for lower-mileage drivers outside California, CFA found. Allstate and State Farm offer average reductions of 11 percent and 13 percent, respectively, outside California.
CFA argues that car insurance rates should be based more on driving-related factors such as mileage than on socioeconomic factors like your credit score or marital status.
J. Robert Hunter, director of CFA and a former Texas insurance commissioner, notes:
“For people in most parts of the country, with California as the notable exception, you’ll often pay about the same auto insurance premium whether you commute 90 miles round trip every day or if you take public transit to work and only drive on the weekends.”
For its part, Progressive says on its website that it normally does not ask policyholders to report their mileage, but that it does reward low-mileage drivers through its Snapshot program, which monitors driving behavior in exchange for discounted rates.
Farmers says on its website that drivers who limit their time behind the wheel “may therefore enjoy low-mileage discounts.”
Nonetheless, until laws change outside of California, consider this a reminder of the importance of periodically shopping your insurance policies around to confirm you’re getting the best rates for which you can qualify.
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