Does your annual mileage affect auto insurance?

Annual mileage does affect auto insurance quotes, and insurance companies will ask you to estimate your mileage when giving you a quote. Those who drive less frequently are assigned cheaper rates, since they pose less risk. Some insurance companies offer low mileage discounts.

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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Written by Rachel Bodine
Feature Writer Rachel Bodine

Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent Daniel Walker

UPDATED: May 20, 2022

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Things to remember...

  • Auto insurance companies determine risk levels and premiums based on annual mileage estimates
  • You should carefully estimate your driving needs for the upcoming year when you apply for coverage
  • You may be able to qualify for low mileage discounts or get pay per mile coverage

Companies may often ask you for your annual mileage before giving you their rate quote when you apply for auto insurance. Why is this so important? What does “annual mileage” mean? And how do you calculate your mileage? Are there ways to get cheaper insurance based on your driving expectations? We understand that price is often a key consideration and have researched the subject to provide you with answers below.

How does annual mileage affect auto insurance?

Some insurance companies want to know how many miles you will drive in the first year before extending coverage. This information is one of the factors that they use to help set insurance rates. Insurance companies extend protection, but they must calculate your potential risk.

As insurance is all about risk, these companies conclude that the more miles you drive in a given year, the higher the potential for an accident and accompanying claim.

You may consider yourself a very safe driver, but accidents can still happen, and you can’t always account for other motorists.

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What does annual mileage mean?

“Annual mileage” is the number of miles you are likely to cover over twelve months, including commuting and leisure trips. Insurance companies understand that you cannot predict the actual number of miles you will drive in 12 months, so they are willing to accept an estimation. 

If your circumstances change and you will likely drive more than you had thought when applying for the policy, get in touch with the company to adjust the number.

How to Calculate Your Estimated Mileage

Before applying for coverage, determine how many miles you will likely drive in the next 12 months. You can base your information on the previous 12-month period and make any adjustments if you think it will change. If your driving pattern is quite consistent, you can reset your vehicle’s odometer/trip meter to zero and record your actual mileage for the next week or month to use as a guide. 

You can also refer to your vehicle’s service history, where the service coordinator typically records your mileage when you visit the shop.

Why You Should Never Knowingly Underestimate

Always be as accurate as possible when supplying estimated mileage to an insurance company. Some people may purposely underestimate their mileage to get a lower premium, but this could backfire. After all, the company could check your actual odometer reading following an accident. 

They may also refer to records kept during an annual safety inspection. If insurance companies have access to a state database, they can estimate the average number of miles you drive. Should they find any anomalies, this could lead to higher premiums.

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Can you pay for insurance based on usage?

Some companies may offer a policy based on payment per mile. In other words, your premiums will be based on usage with a smaller base rate every month and an adjustment for the number of miles that you drive. Compare your options to see if this type of policy would work for you.

Can you qualify for low mileage discounts?

If you believe that you will travel far fewer miles than the average driver, you may get a low mileage discount on your car insurance. In addition, the insurance company may give you a device to track your mileage over the next month.

The Bottom Line on How Annual Mileage Affects Auto Insurance Rates

The number of miles you drive each year will affect the amount of money you pay for insurance coverage. Your auto insurance company may determine that the more you are on the road, the greater the risk you pose and then adjust your rate accordingly. 

You should do your best to estimate your annual mileage as accurately as possible. And keep in mind that you may be able to get low mileage discounts in some cases or apply for “pay per mile” coverage.

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