Is it bad to set your car insurance miles too low?
It's never a good idea to set your annual mileage too low when providing an estimate to your car insurance company. By doing so, you risk facing a penalty or having your policy canceled outright. If you're looking to lower your car insurance rates, consider low-mileage or pay-per-mile insurance programs.
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UPDATED: Dec 16, 2021
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- Intentionally lying about mileage to your car insurance company can result in your policy being canceled
- Underestimating your annual mileage when comparing car insurance can leave you with misleading quotes, so try to have the most accurate estimate of your annual miles driven ready before shopping for insurance
- Consider low-mileage or pay-per-mile car insurance programs if you drive less than average and are looking for ways to lower your rates
While it’s true that drivers who travel fewer miles annually can save on car insurance, this doesn’t mean you should set your car insurance miles too low on purpose.
Setting your annual auto insurance mileage too low can cost you. Although your insurance company may not always send an agent to check your mileage, if you’re found to have exceeded your mileage limit, your monthly rates could increase.
In this guide, we’ll take a look at the risks of setting car insurance miles too low, as well as what to do if you think you’ll exceed your mileage limit for a given year. Plus, we’ll show you how some drivers can reduce their rates with low-mileage car insurance.
After you’ve reviewed the risks of setting your car insurance mileage too low, enter your ZIP code in our free online quote tool to compare rates and find affordable car insurance coverage that’s right for you.
What are the risks of setting your car insurance miles too low?
There are a few risks that come with setting your car insurance miles too low:
- If your insurance company finds out that you are setting your annual mileage too low intentionally, they may decide to cancel your policy or otherwise penalize you.
- If you set your annual mileage too low when comparing insurance options, you may end up paying more for car insurance because you selected an insurer based on rates that don’t actually reflect your driving habits.
- Driving more puts you at a higher risk of getting into an accident, so if your insurer believes you’re driving fewer miles than you actually do and you’re involved in a collision, they may see you as a high-risk driver and adjust your rates accordingly.
Of course, mileage is just an estimate, so your insurance company will allow for wiggle room. Let’s dive a little deeper.
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What happens if you underestimate mileage on car insurance?
If you underestimate your annual mileage when your car insurance company asks for this information, what happens will vary based on how much your estimate is off, how your insurance company determines rates based on mileage, and what state you live in.
For the most part, if your estimate is close (say, you claim to drive 5,000 annual miles, but the true amount is actually closer to 5,500), your insurance company may not see a problem. But if your actual annual mileage is over your estimate by a considerable amount and/or your insurance company finds out you knowingly misled them, you could end up paying more for your insurance or having your policy canceled outright.
If you’re worried that you cannot afford auto insurance at your current rate, don’t attempt to lie to your insurance company about your annual mileage, as this can cost you in the long run. Instead, contact your insurance agent to discuss other options for lowering your rates.
How do car insurance companies verify mileage?
How car insurance companies check your annual mileage varies based on your state. In some states, like California, insurance companies will check your odometer to make sure you’re being charged the correct amount.
Other states require annual inspections to take place, where your annual mileage is entered into a database that your insurance company can then access to ensure your mile limit reflects how much you actually drive.
How can I reduce my rates with low-mileage car insurance?
While it’s never a good idea to try lying about mileage to your car insurance company, there are ways for people who drive fewer miles than average to lower their rates that don’t involve putting their policies at risk. If you’re looking for ways to make your car insurance more affordable, consider low-mileage or pay-per-mile car insurance.
Low-mileage car insurance refers to policies or discounts that make insuring a car more affordable for people who drive less than average. Exactly where “low-mileage” discounts end varies from one insurance company to the next, so talk to an insurance agent to see if you qualify. The Insurance Information Institute also points out that drivers who carpool can also take advantage of low-mileage discounts.
Pay-per-mile car insurance can lower your rates like low-mileage discounts, but it is less widely available. With a pay-per-mile policy, you pay a modest baseline rate and then only pay more for the miles you actually drive. If you drive infrequently or work close to home, pay-per-mile insurance programs, like those offered by Allstate and Metromile, could be a great choice for you.
If you’re looking to save even more on car insurance, the State of Washington has come up with a list of common discounts which you should ask your insurance agent about:
- Safety features like airbags and automatic seat belts
- Anti-theft devices and measures
- Multiple vehicles on the same policy
- Bundling car insurance with home insurance
- Senior driver or student driver discounts
Many of these discounts are actually larger than low-mileage discounts.
How to Decide How High to Set Your Car Insurance Mileage
Determining your average mileage is not difficult.
- First, check the distance you travel during a typical week using your odometer (compare the mile count from one Monday compared to the next, for instance) and multiply it by 52 to get an annual estimate.
- Next, add 5% – 10% to your annual mile estimate to account for any extra travel (it’s better to go a bit over your actual mileage than underestimate it).
- Now, you can use this figure to compare insurance options. You may want to have a professional look at your car as well, depending on your state.
Are you looking for the most affordable car insurance companies? Try our free online quote tool to find great insurance that’s right for you.