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What is a low mileage car insurance policy?

In a nutshell...
  • You must verify your mileage at the beginning and end of the coverage period, just as you would with a discount
  • If the driver exceeds this low-mileage limit, the policy may be canceled or converted to a regular mileage policy
  • Be aware that mileage is not the only factor affecting your car insurance rates

Low mileage car insurance is a form of auto insurance for people who do not often drive their vehicles.

Car insurance companies offer a low mileage car insurance policy to drivers who agree to stay within certain limits to the number of miles a vehicle is used for per year.

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.

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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.

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What are the types of low mileage car insurance?

Low-mileage car insurance is implemented in several ways. First, some car insurance companies offer a discount on your regular premium if you drive fewer miles during the year.

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.

If you exceed the allowed distance, you will have to negotiate with your car insurance company to determine your premium.

It is possible that the company will add a surcharge for the extra mileage. In other cases, you will have to convert your policy to a regular coverage option.

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 covers your vehicle in case someone was to be injured on or around it while it is stationary.

These “no-mileage” policies are typically deficient 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.

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.

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