In California, the type of vehicle you drive does matter. No, we’re not talking about embracing your ride as a status symbol or a measure of your self-esteem. We’re referring to how much you pay for auto insurance. California car insurance premiums largely depend on how old, expensive, safe, or “thief-desired” your vehicle is.
Another major determinant in your auto insurance rates has to do with how much you drive as opposed to what you drive: your annual mileage. The reasoning is pretty logical — the fewer miles you drive, the lower the risk that you will be involved in a collision. The insurance company will less likely have to pay for a claim (and will make more money).
Since insurers prefer these kinds of drivers, they try to attract them by offering lower insurance premiums. In fact, the state of California requires auto insurance companies to consider mileage driven when establishing rates.
Low-Mileage Discounts on California Car Insurance
Though all insurance companies have different criteria, they generally divide their customers into mileage categories. For example, they may give discounts to people who drive fewer than 7,500 miles per year. They may also charge higher-than-average rates for those who exceed 15,000 miles per year. The U.S. Department of Transportation estimates that the average driver records 13,476 miles on the road each year.
The auto insurance savings enjoyed by low-mileage drivers can be substantial. A 2015 study by Quadrant Information Services found that American drivers who decreased their total annual miles from 10,000 to 5,000 saved an average of 7% on their premiums.
The discounts were even greater for high-mileage drivers who pared their annual mileage back to 5,000. Drivers who averaged 15,000 miles a year saw an average discount of 8.4% on their premiums, while those whose yearly mileage exceeded 20,000 recorded car insurance savings of 9.1% on average.
When you look at California specifically, those discounts are even larger. In fact, the Quadrant study shows that no other U.S. state saw a bigger difference in auto insurance rates based on annual miles driven.
California drivers who logged 10,000 miles a year saw a whopping 16.4% drop in premiums on average when they cut their annual mileage in half. That average discount rose to 25.1% for drivers who reduced their yearly miles driven from 15,000 to 5,000.
Drivers in the 20,000-mile club who rolled back their annual mileage to 5,000 saw an average discount of a mind-boggling 29.4%! At this rate, a California driver who pays the state average annual insurance premium of about $856 would pocket an extra $250 each year by dropping their annual mileage total from 20,000 to 5,000.
How To Reduce Your Annual Mileage Total
So what are some ways to lower the number of miles you drive each year? From a macro perspective, you should live as close to your job or school as possible, in order to reduce your daily commute. Another strategy is to select your home based on its proximity to the places you frequent, such as the residences of friends and family members or areas that feature shopping, services, and entertainment.
If it’s impractical to move to another home, you can do the following:
- Take advantage of vanpool or park-and-ride services
- Set up a carpool system with co-workers or classmates
- Use public transportation whenever it’s feasible
- Call on ride-sharing services (like Uber or Lyft) for long commutes or entertainment excursions
- Walk or bicycle when running errands close to your home
Even if you can only embrace these alternatives once or twice a week, it can still make a substantial difference in your annual mileage total.
Consider Mileage When Searching for Auto Insurance
Finally, it’s important to be aware of how many miles you drive when you are shopping for an auto insurance policy. Before signing up with an insurer, ask what the company’s annual mileage categories are and what the threshold is for getting a discount on your California car insurance.
You may only need to make a few minor tweaks to your routine in order to qualify for these savings. AIS Insurance can provide you with auto insurance quotes from multiple companies so you can compare policies and costs side by side.
Most importantly, tell the insurance company what your yearly mileage total is if you think you will be eligible for a discount (most people don’t even ask about it). And always remember the California car insurance mantra: mileage matters.
The information in this article was obtained from various sources. This content is offered for educational purposes only and does not represent contractual agreements, nor is it intended to replace manuals or instructions provided by the manufacturer or the advice of a qualified professional. The definitions, terms and coverage in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.
