What is Considered Low Mileage for Car Insurance
The distance you drive your car daily and annually affects how much it costs for insurance. It makes sense. The more you’re on the road, the greater your chances are of having an accident. Hopefully, those chances remain small, but to an insurance company, more kilometers means more risk. More risk means higher prices.
How are car insurance premiums calculated?
The number of kilometers a vehicle travels in a year is only one aspect that affects insurance pricing. Perhaps the most influential factor is the vehicle’s driver. The record and claims history of drivers named on a vehicle’s policy is the difference between affordable and expensive coverage, with stops at all points in between. Speeding tickets and traffic violation convictions drive up insurance costs. Clean records over a period of years drive costs down.
Other factors such as where a driver lives, the vehicle design and insurance industry statistical information each affect pricing as well.
How does mileage affect insurance cost?
Common questions your insurer asks when pricing your policy involves the distance you drive to work daily and the total mileage your car adds annually.
A motorist who lives and works along the Bloor-Danforth subway line in Toronto may have no daily commute, while a driver living in Laval and working in downtown Montreal may opt to drive daily. The Toronto driver’s use of public transit reduces the kilometers put on the car, reducing the risk of accidents during daily driving.
Living in Vancouver, one driver may shop close to home, visit Stanley Park and other attractions, while flying to Japan for holidays. A similar motorist based in Calgary might drive into the Rockies to ski, visit family in Edmonton a few times a year and take driving vacations to the east coast each summer. The Vancouver vehicle has much less long-distance travel, so its annual road time puts it in a favourable insurance position.
Note that in provinces where private auto insurance serves the market, different providers may weigh the importance of daily and annual driving distance differently. The general rules hold – more kilometers mean higher prices – but the amounts may vary between companies.
How do I reduce the mileage on my policy?
If you’ve over-reported the amount you drive, or your circumstances change, simply contact your insurer to inform them of the change. If it’s substantial, you may qualify for a lower rate.
What happens if I misreport the distance I drive?
Small discrepancies between the mileage you report and that you actually drive is expected and not an issue. When you tell your insurer you use public transit when in fact you drive to and from work is a different situation. Should you have an accident on the way home from work and the insurance company finds in their investigation of the accident that you do indeed drive to and from work, you could find your claims denied and your insurance cancelled.
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- Insurance Bureau of Canada: How Car Insurance Premiums are Calculated
- FSCO: Legislation – Acts & Regulations