What is a Low Mileage car insurance policy?
Low mileage car insurance is a form of auto insurance for people who do not often drive their vehicles. A low mileage car insurance policy is offered by car insurance companies to drivers who agree to stay within certain limits to the amount of miles a vehicle is used for per year. If the driver exceeds this low-mileage limit, the policy may be cancelled or converted to a regular mileage policy. Low-mileage car insurance is useful for drivers who only use their vehicles occasionally, and for people who rarely drive more than a few miles from home.
Why is Mileage Important?
Mileage is one variable car insurance companies use to calculate the risk of insuring you. When you purchase car insurance, you will often be asked how many miles you typically drive your car in a week. From this information, the insurance company can calculate an average number of miles driver per year. If you drive a great deal, your car insurance rates may be higher, as you are considered at higher risk for an accident due to your greater exposure on the road. On the other hand, if you drive only a little your premiums should be less.
What are the types of Low Mileage Car Insurance?
Low-mileage car insurance is implemented in several ways. First, some car insurance companies simply offer a discount on your regular premium if you drive fewer miles during the year. In order to qualify for this discount, you will have to verify your car’s mileage at the beginning and ending of the coverage period. This discount is often only a small portion of your total bill, however, and may not save you a great deal of money over the life of your policy.
Another type of low-mileage insurance is the basic low-mileage policy. This policy assumes from the beginning of your coverage that you will not exceed a certain amount of mileage during the coverage period. You must verify your mileage at the beginning and end of the coverage period, just as you would with a discount. If you exceed the allowed mileage, you will have to negotiate with your car insurance company to determine your premium. It is possible that the company will simply add a surcharge for the extra mileage. In other cases, you will have to convert your policy to a regular coverage option.
There is also a new type of low-mileage car insurance called “pay as you go” insurance offered by some companies. This type of car insurance bases your premium on the amount of mileage you accumulate during the coverage period. This coverage uses an installed device in your car, such as the “On Star” device available from GMAC. This device records your travel time and mileage and reports directly to the auto insurance company. Your premium is calculated and you are billed based on the amount of travel you actually do. This means that your premium can change from one coverage period to the next, and that you may be able to save significantly during times when you do not use your car much, making this program ideal for people with erratic driving patterns, such as those who travel frequently for business. You are not limited by the fear of “going over” your allowed mileage, but you gain the benefit of a low-mileage policy when you qualify for one. If you have traditional car insurance, even if you drive very little, you will not get a lower rate unless you apply for a special discount. With “pay as you go,” the insurance company takes the job of calculation your mileage on itself and automatically adjusts your rate.
How much car insurance do you need if you rarely use a car?
Most states require some form of liability insurance if you drive your car even a few miles each year. However, if your car is in storage, you may also qualify for a “no-mileage” based policy which simply covers your car in case someone was to be injured on or around it while it is stationary. These “no-mileage” policies are typically very low in cost, as there are almost no claims filed on them except in the event of a fire or other disaster which destroys the vehicle; liability claims are very rare on “no-mileage” cars. Talk to your insurance agent to see if you can convert your regular policy to a storage policy during the times you are not actively using your vehicle.
Be aware that mileage is not the only factor affecting your car insurance rates. Your age, gender, location and the make and model of your vehicle also have an impact on your premiums. Most importantly, if you have a poor driving record with claims against you for accidents or an excessive number of driving violations, you will pay more for insurance, regardless of your mileage.