Best Cheap Low-Mileage Car Insurance Companies

Typically, people who drive less than 7,500 miles per year qualify for low-mileage discounts on their car insurance. Drivers on the road for less than 7,500 miles per year can save an average of $86 per year on car insurance compared to drivers who travel 15,000 miles or more. State Farm offers the biggest savings to low-mileage drivers at $115 per year — however, this doesn’t necessarily mean that they have the cheapest overall rates.

Some companies also offer pay-per-mile car insurance, which tracks your mileage and charges you a specific fee-per-mile. However, not every insurance company has this type of plan and may not be the best policy for people who have a regular commute.

For those looking for the cheapest car insurance for low-mileage drivers, there are two types of policies to consider:

• Traditional Low-Mileage Discount: Offered by most insurance companies, this discount offers reduced rates for driving fewer miles. Typically, people who drive less than 7,500 miles per year or 10 miles or less per workday are eligible for this discount.
• Pay-Per-Mile Insurance: Some insurance companies offer plans that track your mileage and determine your rate based on the exact number of miles driven in a given period. This type of policy isn’t available in every state and comes with a loss of privacy, which means that it might work for some people, but it may not be the best option for everyone.

What is considered low mileage per year? Generally speaking, most companies that use annual mileage to determine your rates tend to break mileage down into three categories:

• Low mileage: Less than 7,500 miles per year or 10 miles per day
• Average mileage: 7,500–15,000 miles per year or 20 miles per day
• High mileage: 15,000+ miles per year or 40 miles per day

Compared to average-mileage drivers, low-mileage drivers save $56 per year on car insurance, on average.

Pay-per-mile car insurance is a system that calculates your exact mileage and determines your rates based on how often you drive. This type of program is relatively new, but these plans are becoming more common thanks to phone apps and tracking devices. Some newer companies exclusively use this system to determine their rates.

According to our research, drivers need to travel less than 26 miles per week for a pay-per-mile plan to be cheaper than a traditional policy. Because several factors determine your rates, getting a reduced rate for driving fewer miles may not be the most effective way to lower your car insurance rates significantly.

GEICO offers the best car insurance for low-mileage drivers at an average rate of $982 per year. The company with the largest discount for low-mileage insurance is State Farm. They offer a discount of $115, bringing their average low-mileage premium to $1,092 per year — still $110 more than GEICO’s rate.

Just because a company offers a discount for a low-mileage plan doesn’t mean they have the lowest rate. Comparing quotes and choosing the most affordable plan can save you more money than choosing the company with the best discount for low-mileage car insurance.

USAA technically has the lowest rate for low-mileage insurance. However, because their coverage is only available to military members and their families, they aren’t included in our calculations.

Most car insurance policies factor in mileage when determining rates, but some policies offer a pay-per-mile rate. According to our research, Nationwide offers the best pay-per-mile insurance policy.

Many insurance companies also offer discounts for using apps that track your driving behavior. These programs reward people for driving well, even if they aren’t on the road any less. However, keep in mind that behavior-based programs require you to allow your insurance company to track you on the road. As such, drivers who have privacy concerns may not be interested in this type of discount.

If you drive less than 7,500 miles per year, ask your insurance company if they offer a low-mileage discount. Be aware that maximum mileage requirements are different for each company, so you may qualify for a discount with some insurance companies but not others.

Pay-per-mile insurance is another option to help keep your rates low. However, MoneyGeek’s findings indicate that you’ll have to drive less than 26 miles per week to see significant savings.

While taking advantage of a low-mileage discount can save you some money, there are more effective ways to reduce your car insurance premiums and find the cheapest coverage options. Comparing quotes to make sure you have the lowest possible rate, cleaning up your driving record, improving your credit score and bundling your insurance policies can all help you save. If you don’t have any loans on your vehicle and you can afford to replace it out of pocket, carrying liability-only coverage can help you reduce your overall insurance costs.

MoneyGeek uses a sample driver profile to determine average insurance rates. Our standard driver is a 40-year-old male with a clean driving record, full coverage and liability levels of 100/300/100 with a $1,000 deductible.