How Mileage Affects Your Car Insurance Premium in 2025
Your annual mileage plays a significant role in determining your car insurance premium. In 2025, insurers continue to assess risk based on how much you drive, with higher mileage often leading to increased premiums and lower mileage potentially qualifying you for discounts.
Why Mileage Matters to Insurers
Insurance companies consider mileage as a key risk factor. The more you drive, the higher the likelihood of being involved in an accident, which increases the insurer’s potential liability. Conversely, driving fewer miles reduces exposure to risk, making low-mileage drivers more attractive to insurers.
Average Annual Mileage Benchmarks
According to the Federal Highway Administration, the average American drives approximately 13,500 miles annually. Insurers typically categorize mileage as follows:
- Low Mileage: Under 7,500 miles/year
- Average Mileage: 7,500 – 15,000 miles/year
- High Mileage: Over 15,000 miles/year
These categories help insurers determine premium rates, with low-mileage drivers often receiving lower premiums due to reduced risk.
Impact of Mileage on Premiums
Higher mileage generally correlates with higher premiums. For example, a policyholder driving 20,000 miles annually may pay up to 36% more than someone driving 5,000 miles or fewer. This increase reflects the greater exposure to potential accidents and claims.
Low-Mileage Discounts and Usage-Based Insurance
Many insurers offer discounts to low-mileage drivers. Additionally, usage-based insurance (UBI) programs have gained popularity. These programs track driving behavior and mileage through telematics devices or mobile apps, allowing insurers to tailor premiums based on actual usage. Drivers who travel less and exhibit safe driving habits can benefit from reduced rates.
Tips to Manage Your Insurance Premium
- Accurately Report Mileage: Ensure you provide precise mileage estimates to your insurer to avoid discrepancies.
- Consider UBI Programs: If you drive infrequently, explore usage-based insurance options that reward low mileage and safe driving.
- Combine Trips: Reducing the number of trips can lower your annual mileage, potentially qualifying you for discounts.
- Regularly Review Your Policy: Update your insurer if your driving habits change significantly, such as transitioning to remote work.
Conclusion
Understanding how mileage affects your car insurance premium can lead to significant savings. By accurately reporting your mileage and considering low-mileage or usage-based insurance options, you can optimize your premiums to reflect your driving habits in 2025.