If you don't use your car regularly or only cover limited mileage over the year, you're already saving on fuel and maintenance costs. But if you ony use your car for short trips, you want to pay as little as possible for your insurance too.
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What is low mileage car insurance?
Your insurance premium is determined by many factors, but insurers mostly base the price on what puts you at risk of making a claim. Factors include your driving experience, whether you've made any motor insurance claims in the past three to five years, and how many miles you drive.
The logic goes that the more time you spend on the road, the more likeyly you are to have an accident. So you might think that if you drive fewer miles, you will be charged less for your insurance.
However, based on past accident data some insurers may conclude drivers who cover fewer miles than average are also less likely to know the road wll and spot risks. As such, they may be more likely to be involved in an accident.
The low-mileage trap
As anyone who has gone online to search for car insurance knows, you can get a quote then tweak the details to see if it'll yield to a better result. This is fine if you're being honest, such as if you have two job titles and aren't sure which one will lead to a better quote. But it's not okay if you know what you enter is false.
Declaring an annual mileage that is way below what you know you'll do falls into this category. While it might seem a good way to keep costs down, it's actually a false economy as making any dishonest declaration to your insurer is considered insurance fraud and will invalidate your cover.
What can you do if you're a low-mileage driver?
Insurers' experience of claims from drivers who are shown to have lied about their annual mileage have led many policy providers to suspect very low mileage on quote requests. Instead, they offer a price based on a higher number of miles. Unfortunately, this makes it harder to get cheap insurance if you are guenuinely a low-mileage motorist who drives fewer than 5,000 miles a year.
But thankfully there are some insurers who offer specialist low-mileage policies, while others will give a low-mileage discount if you only cover a limited number of miles every year.
Who can benefit from low-mileage car insurance?
Not everyone needs or wants to drive a lot. In fact, some people only do so when they absolutely have to. Here are a few examples of people who could benefit from considering a low-mileage car insurance policy:
- retirees who make use of free public transport or walk unless they absolutely need to get in their car, perhaps to do the weekly supermarket shop or attend an importand appointment
- students who only drives during the holidays
- City dwellers who have all the amenities and shops on their doorstep and only use their cars for the odd excursion, perhaps to visit relatives or for a day out
How to estimate your mileage
You may find it difficult to estimate how many miles you will do in a year, as you have to tell your insurer in advance before you take out the policy. But it's important to be as accurate as possible so you can get the right price and make sure you're covered.
Even before the coronavirus pandemic the average miles covered by English drivers was falling. But how can you tell what your annual mileage is?
The most accurate way to establish how much you drive each year is to check your previous MOT or service certificates, which list the mileage on your car each year when you visited the garage.
You can then use these figures to work out how many miles per year you do on average, or spot a realistic trend in your driving habits. If your circumstances have changed or are expected to change, for example you're driving to a different place of work or working from home now, you'll need to take this into consideration.
What are the different types of low mileage car insurance policies?
Given there are all manner of reasons why someone may drive only occasionally or for short trips, it comes as no surprise to find a range of low mile car insurance policies on the market. Here are the main ones:
Pay as you go insurance: This option uses a tracking app on your mobile phone or a small device linked to your milometer to establish when you're on the move. Pay as you go car insurance records exactly how many miles or hours you cover, and uses this data to help fix premiums.
Black box car insurance: Also called telematics car insurance, this sees a small GPS-enabled device installed discreetly behind your dashboard, which records how many miles you cover. Depending on the policy it may also record how fast you drive, how sharp you break and at what time of the day you take to the roads
Classic car insurance: If you've got a car that's more than 15 years, or 10 in some cases, and calued at £15,000 or more it could be classed as a classic, meaning it could fit the criteria for classic car insurance. This cover is relatively inexpensive because the type of motorist who buys it tends to be experienced, careful and unlikely to do too many miles a year.
Multi-car insurance: If you have more that one car in your household you could save money by getting them all covered together by the same insurer. Each car will differ in spec, value and driver experience. All of which is taken into accound when premiums are set, as is mileage. The savings occur because the insurer's admin task is greatly streamlined.
Temporary car insurance: Also called short term car insurance, this solution could be ideal for people who really don't need a car all year round. It may suit drivers who walk or use public transport to get to where they are going most of the time, and rarely require a car.
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