Car insurance — state law says you’ve got to have it, which means you’ve got to pay for it. But if you have the right strategy, you can save money WITHOUT jumping through endless hoops.
How much are you paying for car insurance?
According to 2014 figures, the average California driver paid $164 per month in car insurance premiums. That adds up to a whopping $1,968 by year’s end! If that seems like a lot, you’re right. It’s more than double the national average (which was $907.38 in 2014), and drivers in only five states had to pay more than California drivers did each month.
Luckily, there’s an easy way to lower your monthly premium — by making sure you only drive 10,000 miles each year.
Here’s why your mileage is so important to your car insurance company:
- Your insurance premiums are based on risk. The more risk you pose of getting into an accident, the more you’re going to pay. And in the insurance company’s eyes, driving more miles = more risk of being involved in a crash.
- California law forbids insurance companies from using your credit score to set your premium rates.
- Since they can’t use your credit score, they’ve turned to the next best thing — your annual mileage.
- Each insurance company sets its own average yearly mileage threshold. Go over it, and your premiums will go up!
How many miles does the average California driver travel in a year?
Anywhere between 10,000 and 15,000 miles. The state’s insurance companies use this average to set their own thresholds. Each company is different, but most of the thresholds either fall within this window or are slightly above it.
How much can you save by staying below your insurance company’s threshold?
Hundreds of dollars!
Check out this example from a two-car household we worked with recently. By reducing the annual mileage from 16,000 to 10,000 on Vehicle 1 and reducing Vehicle 2’s annual mileage from 13,000 to 10,000, this couple saved $70 in premiums each month. That adds up to $574 worth of savings each year!
But if lower is better, why not aim for fewer than 10,000 miles each year?
Yes, dropping below 10,000 miles will fetch you an even bigger discount. However, the insurance companies will make it hard on you if they think you drive TOO FEW miles each year. They won’t just take your word for it. Instead, they’ll audit your policy and make you prove that you really do drive less than the average Californian.
How can you prove that?
- Oil change paperwork
- Official odometer readings
- Monitoring systems, which involve getting a device from your insurance company and plugging it into your car
Sounds like a pain, right? It is!
Even worse, offering this proof isn’t a one-time deal. You’ll have to continually prove to your insurance company that your mileage is staying below that “magic” 10,000 limit. If you don’t, you’ll lose your discount.
That’s why 10,000 miles is the sweet spot!
As long as your annual mileage is right at 10,000 miles, your policy won’t be audited — meaning that you won’t have to submit any proof of your driving habits. You can simply enjoy your savings, without all of the hassles.
Of course, all of this depends on your specific policy.
Remember, each insurance company has its own mileage threshold. But in most cases, as long as your policy states that you drive 12,000 miles per year or more, you can reduce it without having to submit any proof.
Sounds a whole lot easier than trying to compare rates from every insurance company under the sun, right?
But what if you absolutely-positively-can’t cut down on the miles you drive?
Don’t worry, there’s still a chance you can qualify for a mileage discount!
Let’s say you have two vehicles. The odds of you driving them a combined 30,000 miles each year are very slim. If you can show your insurance company proof that you drive less than that, you’ll likely receive a discount.
Unfortunately, most people DON’T know about these discounts. That means most people are paying more than they have to… DON’T be one of them!
Instead, turn to the team at Shift Insurance. Our agents have the expertise to help you save the most money — while making sure you deal with as little red tape as possible!
Latest posts by Raphael Locsin (see all)
- How Credit Affects Homeownership - August 1, 2016
- New Business Restrictions: Santa Clarita Fire - July 26, 2016
- 5 Things to Know Before Signing a Rental Agreement - July 16, 2016