Low mileage car insurance is an excellent way to save money if you don’t drive much. There are three different types of low mileage insurance plans available. They aren’t all available in all states, though, and there are some serious restrictions. If you are comfortable with the restrictions, though, and qualify for this type of car insurance, your premiums could be as much as 50% less than what you are paying right now.
Type 1 of 3: Low-mileage discount
The low-mileage discount is the most commonly available type of low-mileage car insurance available. Almost all car insurance providers offer this discount. If you live close to work, carpool with co-workers, walk to work or the grocery store, or ride a bicycle to work or the grocery store, you will probably qualify for this discount.
The mileage limit varies from insurance company to insurance company. It could be as low as 7,000 miles a year or as high as 15,000 miles a year.
Type 2 of 3: PAYD car insurance plan
A PAYD or pay-as-you-drive plan is a very cheap low-mileage car insurance policy. It can save you as much as 50% on your premiums. With this type of plan, the car insurance provider monitors your driving and determines your premiums based on how far, how often, how well, and at what time of day (or night) you usually drive.
They monitor your driving habits through a device that you plug into your car’s onboard diagnostics port and/or an app that is downloaded onto a smartphone.
Type 3 of 3: Actual mileage plan
An actual mileage plan is the cheapest low-mileage car insurance available. It could reduce your annual premiums by as much as $650, when you don’t drive more than 50 miles each week. Even if you drive between 50 and 100 miles a week, you could still save up to $500 per year.
When you buy an actual mileage policy, the insurance provider determines a base fee for the insurance. This fee is formulated according to the usual rate-determining factors like your age, address, credit score, and the type of car you drive. As you drive, they tally up the miles and bill you a certain amount per mile. The cost per mile varies, depending on when and where you drive.
As with the PAYD plan, you have to leave a device plugged into your car’s onboard diagnostics port which allows them to keep track of how many miles you drive each month.
Unfortunately, the car insurance providers who offer this type of policy can’t sell car insurance to drivers in every state. Metromile is the car insurance company that started the actual mileage plan. They can only sell car insurance to people who live in California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia, and Washington. Esurance has also begun selling this type of policy, but only to people who live in Oregon.