Best Car Insurance for Low Mileage Drivers | FinanceBuzz

If you work from home or you don't drive a lot, it may be hard to understand why you're paying so much for car insurance when your car is just sitting in the garage most of the time.

As a remote worker, I usually drive less than 10,000 miles in a year. But I'm still paying off my Jeep, so I need to ensure I have sufficient coverage.

Low-mileage insurance can help lower premiums on car insurance for drivers who don't spend a lot of time on the road. Also referred to as usage-based insurance, programs like telematics and pay-per-mile insurance usually involve tracking your mileage and driving habits to help personalize your car insurance premiums and give you discounts for less risky driving behavior.

The best car insurance for low-mileage drivers can save you significant money, both for driving less and for driving safely.

How we evaluate products

Company name	Best/Excellent for	Average monthly full coverage cost for usage-based policies	Average annual savings
Progressive	Name Your Price tool	$167	$231
Allstate	Low premiums	$131	$629
Nationwide	Roadtripping	$180	$465
Travelers	Financial stability	$190	$684
American Family	Low-mileage discounts without apps or devices	$150	$360
Date sourced from Insurify

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Progressive

Best for a Name Your Price tool

Company details

AM Best: A+ Superior
J.D. Power claims satisfaction: 672 (below average)
BBB: A- (not accredited)
NAIC complaints: 0.50 (less than average)

Progressive Insurance is one of the largest auto insurance companies in the United States. While it ranks low for auto claims satisfaction, it has high ratings for its financial stability and receives fewer customer complaints than other insurers.

Progressive's Snapshot program can help low-mileage drivers save money on car insurance. The program uses a mobile app to monitor your driving habits and your mileage. If you drive safely, you could earn a discount on your insurance premiums. However, if you are a poor driver, your rates may increase.

Pros

Snapshot telematics program may help you earn a discount on car insurance
You earn a discount just for participating in the Snapshot program
Name Your Price tool gives you more control over premium prices

Cons

Your rates could increase if you have poor driving habits
Low rating for overall customer service

Learn more in our Progressive review

Allstate

Best for low premiums

Company details

AM Best: A+ Superior
J.D. Power claims satisfaction: 691 (below average)
BBB: A+ (not accredited)
NAIC complaints: 1.02 (average)

Allstate offers a couple of ways for low-mileage drivers to save money on their car insurance premiums. Milewise is its pay-per-mile car insurance plan designed specifically for low-mileage drivers who work from home, are retired, or stay home to care for their children.

With Milewise, you have some price options to choose from. You could pay a daily base rate plus a per-mile rate when you drive. You could choose the unlimited vehicle option where you pay a flat daily rate regardless of how many miles you drive. You can also choose a combination of these two options.

Allstate also has its Drivewise telematics program that tracks your miles and driving habits, and rewards you with discounts for driving safely. Both Milewise and Drivewise require you to use a mobile app to monitor your driving. For Milewise, you'll also have to install a small device in your vehicle's diagnostic port.

Pros

Offers Milewise pay-per-mile program and Drivewise telematics program
Provides several discounts, including safe driving, bundling, and good student discounts
Monthly premiums are typically lower than other insurers

Cons

The Milewise program is not available in all states
Ranked lower than the industry average for claims satisfaction
Has slightly more customer complaints than other insurers

Learn more in our Allstate review

Nationwide

Best for road trips

Company details

AM Best: A Excellent
J.D. Power claims satisfaction: 728 (above average)
BBB: A+ (accredited)
NAIC complaints: 0.90 (just below average)

Nationwide offers two usage-based insurance programs that are good ways to lower car insurance for low-mileage drivers.

SmartMiles is its pay-per-mile program. With this plan, your cost includes a base rate and a variable rate based on how many miles you drive in a month. That variable rate can change, depending on how much you drive. Going on a road trip? No need to worry about your trip jacking up your variable rate because SmartMiles gives you an exception where only the first 250 miles driven in a single day count.

SmartRide is Nationwide's telematics program that monitors your driving through a mobile app and rewards you with discounts if you are a safe driver. What is nice about SmartRide versus other telematics programs is that your rates won't increase if you have poor driving habits.

Pros

Offers SmartRide telematics program and SmartMiles pay-per-mile program
Accident forgiveness is available in select states
SmartMiles only counts the first 250 miles driven per day — great for road trips

Cons

Coverage is not available in all states
Average monthly premiums are on the high end

Learn more in our Nationwide review

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Travelers

Best for financial stability

Company details

AM Best: A++ Superior
J.D. Power claims satisfaction: 684 (below average)
BBB: A+ (not accredited)
NAIC complaints: 3.96 (well above average)

While Travelers doesn't offer pay-per-mile car insurance, it has a telematics program enabling you to earn discounts through safe driving. This can also benefit drivers who aren't on the road very often. The insurer provides various versions of its IntelliDrive telematics program, which differ depending on your state.

You can save almost $700 a year using IntelliDrive, but Travelers' less-than-stellar reputation with customers may make you want to consider other insurers. The company has a below-average rating of 684 (out of 1000) in the J.D. Power 2024 U.S. Auto Claims Satisfaction Study. According to the National Association of Insurance Commissioners (NAIC), Travelers also received almost four times as many complaints as the average for other insurers.

Pros

Discount offered for signing up for the IntelliDrive telematics program
Provide numerous coverage options, including GAP and accident forgiveness
Financially stable company

Cons

High number of customer complaints
Below average on claims satisfaction
Rates can increase with poor driving habits

Learn more in our Travelers review

American Family

Best for low-mileage discounts without apps or devices

Company details

AM Best: A (Excellent)
J.D. Power claims satisfaction: 692 (just below average)
BBB: A+ (not accredited)
NAIC complaints: 0.47 (below average)

If the idea of having a device in your car that tracks your every move is preventing you from getting pay-per-mile insurance coverage, consider American Family Insurance. With its MilesMyWay coverage, drivers who log less than 8,000 miles a year can save money by simply taking a couple of photos of their odometer. Just take an odometer picture twice a year, submit it online, and you could save up to 25% off your premium.

American Family also has a usage-based insurance program called DriveMyWay that rewards you for safe driving. This program requires you to use a smartphone app to monitor your driving habits. You also get a discount just for signing up. However, like many programs, your rate can increase if you drive poorly.

Pros

MilesMyWay provides a discount for driving under 8,000 miles per year
No penalties for driving over 8,000 miles with MilesMyWay
No device or app is required for the MilesMyWay program

Cons

Not available in all states
Rates may increase with poor driving habits
Ranks just below average for claim satisfaction

Learn more in our American Family Insurance review

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When and how to choose low-mileage insurance

Low-mileage car insurance can be a smart choice for you if you don't drive many miles each year. Typically, drivers who drive less than 7,000 miles per year may qualify for special low-mileage discounts or pay-per-mile insurance.

If you work from home, regularly use public transportation, or only drive occasionally, you may be able to lower your insurance costs with a low-mileage plan, which charges you based on how much you drive.

When considering low-mileage insurance, you should keep these factors in mind.

Driving habits: Low mileage insurance only benefits you if you don't drive a lot to work and play. Otherwise, traditional coverage may be a better option.
Data tracking: Pay-per-mile insurance and telematics programs typically use a mobile app or plug-in device to track your mileage and other driving habits. If you are uncomfortable with this, stick with traditional insurance.
Pricing structure: Low-mileage policies may charge a base rate plus a per-mile charge. Before you sign up for this type of policy, make sure you do the math to ensure you are saving money.
Availability: Not all insurers or states offer low-mileage insurance, especially pay-per-mile plans. This means your options may be limited depending on where you live.

Drawbacks of telematics car insurance

While telematics or usage-based insurance programs like Progressive Snapshot or Allstate Drivewise may help save money on car insurance, they have drawbacks that you should be aware of.

One primary concern is privacy. These programs usually require you to use a mobile app or plug-in to track your driving behavior, including how many miles you drive. Some drivers feel this is invasive, especially if the data collected goes beyond mileage and includes braking, acceleration, and even the time of day you drive.

Monitoring your driving can also backfire and end up costing you more rather than saving you money. While insurers use these programs to reward you for good driving habits, they may also increase your rates for poor driving habits, such as hard braking, speeding, or driving late at night.

If you're considering a telematics policy, it's important to read the fine print to understand how your data will be used, what behaviors could impact your premium, and whether rates can increase as well as decrease.

FAQs

How many miles is considered low mileage for insurance?

For insurance purposes, low mileage typically means driving less than about 7,000 miles per year. Insurance companies may use different thresholds; anything below the national average of about 13,000 miles annually may be considered low mileage.

Is low mileage insurance cheaper?

Yes, low-mileage insurance is often cheaper. With pay-per-mile insurance, you only pay for when you actually drive, so the less you drive, the less your insurance will cost. Low mileage drivers can also save money with telematics insurance programs because the less you drive, the lower your risk of unsafe driving habits like speeding, hard braking, and getting into accidents.

Can your insurance go up because of mileage?

Yes, your car insurance can go up if your mileage increases. Risk is a significant factor in determining how much you must pay for car insurance. Just like your rates can decrease when you don't drive as much because you're at less risk of getting in an accident, if you drive more, you're at higher risk, which will be reflected in your premium.

If you are on a pay-per-mile insurance program and your situation changes so you are driving more, let your insurance company know. That way, you won't be caught off guard by a significant rate adjustment.

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Bottom line

Low-mileage car insurance can be a cost-effective option to lower your car insurance costs if you don't spend much time behind the wheel. Telematics and pay-per-mile programs can help you save money on your premiums while still ensuring you're covered.

Which usage-based insurance is right for you depends on your driving habits and personal preferences. If you drive less than 7,000 miles annually, you may want to consider a pay-per-mile program like Allstate's Milewise or Nationwide's SmartMiles.

A telematics program like Progressive's SnapShot or Travelers' IntelliDrive may be a better option if you are a relatively safe driver. If you want a low mileage discount without having your driving tracked by a plug-in device or mobile app, try American Family's MilesMyWay program.

It's worth the time comparing low-mileage insurance policies to see which insurer offers the best value. Check out our list of the best car insurance companies for more options.

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