Your auto insurer may be missing a key risk factor |

Your auto insurer may be missing a key risk factor

Helen Champion 5 March 2018 NEWS

Low-mileage drivers punished for reducing their risk on the nation’s roads.

How much you drive is among the most important factors in predicting accidents.

It’s a simple fact. If you’re not driving, you can’t crash. But it seems many auto insurers simply don’t recognize this big risk factor when calculating the cost of coverage for drivers.

The Consumer Federation of America (CFA) obtained and analyzed basic insurance quotes from five insurers across 12 American cities. What it discovered may shock you.

The nation’s largest auto insurers are passing on little or no reductions in premiums to drivers who try to cut down on their mileage.

On average, that’s a savings of only $30 a year for every 5,000 fewer miles driven annually.

What’s more, CFA has also found that when setting premiums, insurance companies are more likely to look at personal characteristics such as the marital status or credit score rating of a customer over key risk factors such as how many miles a customer has driven throughout the year.

There is, however, one exception to these unfair rates.

Of the cities researched by CFA, Los Angeles, California, is the only area where consistent reductions are passed on to low-mileage drivers.

Very low-mileage drivers can pay nearly a third less than very high-mileage drivers. That’s a savings of more than $340.

This almost certainly stems from the fact that insurers in California are required by law to first look at a customer’s driving record and then secondly at that driver’s annual mileage when considering their premiums.

With such a huge discrepancy in coverage rates across the country, CFA is calling on state lawmakers and insurance commissioners to demand that a driver’s mileage is more closely tied with their insurance premiums – resulting in better deals for customers.

As part of its research, CFA approached Allstate, Farmers, Geico, Progressive and State Farm for online premium quotes for basic liability coverage across Atlanta, Baltimore, Boston, Charlotte, Chicago, Cleveland, Houston, Los Angeles, Minneapolis, Oklahoma City, Rochester (NY) and Tampa.

If you want to get the facts, look at our car insurance guide to get the lowdown. Or discover all the ways you can get a discount on your car insurance.

And insurance isn’t the only factor to consider when trying to cut your vehicle costs. Here are some of the cheapest cars to own overall.

Latest news headlines

Picture: Shutterstock

Ask an Expert

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms and Conditions and Privacy Policy.
Go to site