Driving 12,000 or fewer miles a year may earn you low-mileage insurance discounts. In general, you’ll see the most savings if you drive less than 5,000 miles annually. According to Insure.com, someone who drives 10,000 miles annually will pay 4% less than someone who drives 12,000 miles. Driving 7,500 miles annually could reduce your premiums 10% compared with driving 10,000 miles.
- Pay-per-mile insurance calculates a base daily rate for every day you drive, plus a per-mile charge for each mile driven. A device placed in your vehicle tracks your mileage, which is used to calculate your monthly premium.
- Usage-based insurance goes a step further, using a device in your car to track not only miles driven, but also driving habits. For example, if you often speed or brake abruptly, that will factor into your insurance rates.
To decide whether pay-per-mile insurance or usage-based insurance could save you money, get a quote based on your driving habits. Keep in mind that if you start driving more, these policies could ultimately cost more than standard insurance.
Other Ways to Save on Car insurance
If driving less isn’t practical for you, try these ideas to lower your car insurance premiums:
- Downgrade your coverage: Collision and comprehensive coverage, included in standard auto insurance, covers loss of or damage to your vehicle. The payout is limited to the car’s value. Dropping collision and comprehensive coverage for an older car that isn’t worth much could save you money, assuming you can afford to replace your car if it’s totaled.
- Eliminate extras: Car insurance may include extras you don’t need, such as rental cars or roadside assistance.
- Drive safely: Accidents or traffic violations on your driving record tend to raise your rates.
- Raise your deductible: Choosing a higher deductible typically lowers your premiums. Just make sure you can pay the higher deductible if you file a claim.
- Bundle insurance policies: You can lower your premiums by using the same insurance carrier for multiple vehicles or drivers, or by getting homeowners, renters or other insurance from your auto insurance company.
- Ask about discounts: Many insurers offer discounts for membership in certain organizations, taking driver safety courses, going paperless or setting up autopay. It never hurts to ask.
Is paying your insurance premium all at once a smart move? That depends. Drivers who paid their premium in full saved an average of 4.7% on insurance in 2021, according to Zebra. But if paying upfront would sap your savings, it may be better to pay monthly.
Because premiums vary widely from one insurer to another, shopping around can save you hundreds of dollars. Experian’s auto insurance marketplace is an easy way to compare rates from a variety of insurance companies.
Insurance companies in most states review your credit-based insurance score when setting premiums. Because this score uses similar information to your FICO® Score☉ , maintaining good credit can contribute to lower insurance rates. Check your credit report and credit score regularly and take steps to improve your credit score if it’s lower than you’d like
