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Average annual miles indicate the number of miles drivers typically travel during the year. You can casually use this number to determine whether a vehicle gets used less than or more than usual. But car insurance companies use average annual miles data points as one factor that influences your rate. Why? Because the more you drive, the more likely you’ll be involved in an accident. Understanding your average mileage per year and other driving habits can help you keep your insurance rates in check. What Are Average Miles Driven Per Year?The United States Department of Transportation Federal Highway Administration said that the average driver traveled 12,724 miles in 2020. That’s down from 14,263 average annual miles in 2019. The 2020 average equates to 1,060 miles per month per driver, or about 35 miles per day. By comparison, the DOT said the average annual miles was 13,476 in 2018. People rely on their cars because public transportation systems vary by location. Without vast public transportation systems to rely on for many Americans, cars allow many drivers to get to work, school, or recreation. Altogether, American drivers traveled 2.9 trillion miles on rural and urban roadways in 2020, according to the most recent FHWA data. The figure is dramatically less than the previous year’s tally because the COVID-19 pandemic forced lockdowns in 2020. The DOT said the vehicle distance traveled in 2020 was 12.4% less than the previous year’s total. How Does Annual Mileage Affect Insurance Rates?Your annual mileage directly affects how much you pay for car insurance. Motorists who spend more time on the road have a greater risk of filing an insurance claim than infrequent drivers who are less likely to have an accident. Insurance companies use the number of miles you drive each year — along with other criteria such as age and experience — to predict your risk and set your premium accordingly. Typically, insurers ask about average annual miles when drivers apply for a policy. It’s best to make an honest mileage estimate for how much you drive. While there might not be a legal consequence for underestimating your annual mileage on the application, it could become problematic if you get into an accident. The insurer will learn the vehicle’s mileage if a claim gets made. Some companies request odometer reading updates. Other carriers may perform random mileage checks to avoid “soft fraud” when figures reach below-average miles. Be sure to let your insurer know if your driving circumstances change. Having a shorter commute might produce a lower premium. For commuting, business, or pleasure, the type of driving you do affects how much you pay for car insurance coverage. What Are Commuting Miles?Commuting to work is the primary reason most people drive an automobile. “Commuting miles” is the term used for the number of miles it takes for a policyholder to get to work and back. Insurance companies use the figure to help determine whether an applicant’s annual mileage estimate is realistic. Insurance carriers often allow up to 20 miles each way for commuting before increasing rates. Daily commuters who travel more than that might see higher rates because of additional time spent on the road, which often occurs in densely populated areas with higher instances of accidents. Do Different Demographics Play a Role in Annual Mileage?Actuaries at insurance companies crunch numbers, predict the risk among policyholders, and set policy premiums accordingly. The most recent figures available from the DOT show significant differences in driving behavior exist according to gender and age group.
What Do Insurance Companies Consider Low Mileage?Infrequent drivers may find savings if they drive less than the average annual mileage. Insurers typically give the highest discounts to drivers who log less than 7,000 miles annually on their vehicles. Low-mileage car insurance works by tracking miles electronically, either with a telematics device installed in the vehicle or through a mobile app installed on your smartphone. Premiums for this type of insurance involve a flat monthly rate and a small fee per mile. Some motorists might have privacy concerns about the tracking, while others find the cost savings outweigh any perceived intrusion. Don’t worry, though; they don’t care about where you are driving to, just how many miles it takes you to get there. Select insurers offer standalone low-mileage policies, or you can enroll in mileage-based discount programs through a standard insurance carrier. Low-Mileage Discounts and Other SavingsWhat qualifies as low mileage varies with insurance companies. Check with your carrier for potential mileage-based auto insurance discounts. Reductions can vary by state, but driving fewer than average annual miles may bring about 3% in policy savings. Other insurance based on vehicle usage can create savings of up to 15% by using telematic devices, similar to those used for pay-as-you-go low-mileage policies. The COVID-19 pandemic boosted consumer interest in usage-based insurance policies using telematics. The increase in people working from home or unemployed and the cancellation of public events led to many cars parked in garages and driveways instead of being driven on roads. Many owners looked at monitoring as a way to save money on vehicles not being used. Some insurance companies promote usage-based insurance and telematics to monitor teen drivers and offer tips on vehicle maintenance and safe driving. Each State’s Average Annual MileageMore than 228 million drivers in the 50 states and the District of Columbia contribute to the average miles driven in 2020, the most recent figures available. Overall, annual mileage decreased from the year before because of pandemic-related business closings and travel restrictions. Only two states, Vermont and Tennessee, had mileage increase that year over the previous period. In the District of Columbia, drivers travel about 5,800 miles annually, the lowest average in the United States. Residents of Wyoming log the longest distance, with an average of almost 23,000 driving miles per year.
Does Increased Average Annual Mileage Impact Car Prices?The national average annual mileage in 2011 was almost 2,500 miles less than the most recent average in 2020. This increase in miles driven per year impacts the way Americans choose to buy cars, too, choosing more fuel-efficient hybrids and electric vehicles. In addition, when you sell a car, high or low mileage will impact the sales price, along with vehicle depreciation and a host of other factors. Drivers who lease their vehicles must recognize how many miles they drive. Leases commonly have annual mileage allowances of 10,000 miles or 12,000 miles. However, high-mileage leases are available. This type of lease agreement costs more, allowing Americans to drive additional miles without exceeding their lease terms. Related Stories:
Editor’s Note: This article has been updated for accuracy since it was originally published. |
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