May 18, 2010

How Low Mileage Discounts Affect Your Auto Insurance Quote

Trying to get auto insurance quotes can be a difficult experience. You have to determine what kind of coverage you need and what kind of policy is right for you. You also need to get coverage you can afford. Fortunately, there are several ways that auto insurance companies determine your insurance rate and there are many ways you can lower your premium and monthly payments. One of the best ways to try to secure a lower cost for auto insurance is to take advantage of low mileage discounts.

One of the ways that auto insurance companies calculate your insurance rates is to determine how much mileage your car gets on a yearly basis. The less mileage you put on your car, especially if you drive less than the national average, the better off you are — and the lower your auto insurance quotes are likely to be. Most companies determine your mileage by asking you to estimate the average amount you drive in your daily life. The biggest factor in this estimation is in mileage to and from work; the fewer miles you have to drive to and from work the fewer miles you are likely to put on your car throughout the year. Car insurance companies also take into account other distances a person is likely to drive, usually calculated as from their residence to daily activities such as schools, grocery stores, and gas stations.

Though most companies ask people to estimate their reasonable driving distance, some companies are beginning to use technology to assist them in determining the mileage of their customers. Some companies require regular odometer checks from their customers. Other companies have started pilot programs where GPS devices are attached to the insured car and monitor driving behavior as well as mileage.

The amount of mileage that customers drive is important to insurance companies because it is one way companies access risk. The lower the average mileage of a car, the less the customer drives. The less the customer drives, the less the likelihood that they will be involved in an accident. The customer is simply not on the road being subjected to risk.

Additionally, many companies offer customers low mileage discounts. These are special discounts given to customers who drive less than the average amount of miles per year. Customers may also be eligible for this discount if they carpool to work. Carpooling to work lowers the miles driven on the customer’s car, therefore making the customer eligible for a discount. Customers with low mileage are less risky for the insurance company and therefore may be eligible for discounts. Make sure you know your mileage before looking for insurance quotes.