Automobile Insurance You Can Count On…One Hand

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Save Money On Car Insurance By Driving Less

Does your car insurance premium go up the more you drive?

Yes, of course it does, the more time you spend on the road the greater chance of an accident. While yearly driving mileage is usually self-reported when you sign up for coverage, many insurers are offering discounts for drivers who are willing to let them peer over their shoulder, electronically. If a driver drastically lowers their mileage and drives well they could qualify for a big discount.

How Big Are the Discounts

In some cases the discounts can range to 50 percent if the driver maintains a low mileage total but most insurers require that they verify your driving habits by installing a telematics device in your vehicle. In addition the mileage limits are pretty low, often in the 2500 miles every six months range. Other insurers offer small discounts to drivers who drive less than 15,000 miles a year but to get a bigger discount, in the 25 percent range mileage limits of 7500 to 10,000 miles per policy period apply.

Telematics devices which are about the size of a garage door opener and plug into the OBII port under the steering wheel of most vehicles. These devices capture and transmit a variety of information, everything from the number of miles you drive to top speeds hit and even if you stop or accelerate suddenly. Your insurer will use this information to evaluate your driving. Some insurers charge a small monthly fee for the telematics device while others offer it for free.

If insurers like what they see and you keep your mileage down the discounts can be large. While a 30 percent discount is not uncommon, most fall into the 10 to 15 percent range. This can cut a $700 six-month premium down to a more manageable $490. The downside is that your mileage is not all your insurer is looking at.

They are Looking at More Than Mileage

While there are a couple insurers that only look at mileage, the majority of insurers will use telematics to look at much more. If they don’t like what they see in regards to your driving habits you will not only lose any potential discount, you may end up with a surcharge on your next bill, actually raising your premium. Many insurers cap the potential surcharge but you could see your rates climb 10 percent or more.

According to industry experts, drivers who drive less than 9,000 miles a year, stay off the roads during peak times and keep their sudden acceleration to a minimum will get the biggest discounts, often ranging up to 30 percent. Keeping the mileage even lower will generate a bigger discount.

On the other hand, if you are doing a lot of driving between midnight and four a.m. which is the witching hour for car crashes, there is a good chance you may end up with a surcharge instead of that discount you were hoping to get.

Despite the risk of a surcharge, most drivers will come out ahead if they let their insurer ride shotgun. A 2008 Brookings Institution report found that if all drivers were willing to install telematics the total savings could be huge. They found that two out of three households would save up to $270 per car every year.