What is low-mileage car insurance?
Low-mileage car insurance is designed for motorists who only drive a short distance each year.
According to figures released by the Department of Transport, the average car in the UK drives 7,134 miles per year. And while each insurer has a different threshold for their low-mileage car insurance policy, a limited-mileage plan might be worth investigating if you travel less than this every year.
Choosing low-mileage car insurance could save you a decent chunk of money. Research from By Miles, a specialist low-mileage insurer, found that motorists who drive between 5,000 and 6,000 miles per year pay an average of £232.59 more for standard car insurance premiums than motorists who drive 11,000 to 12,000 miles in the same period.
Most car insurers will offer some level of low-mileage insurance, but there’s a range of firms that specialise in it, and may be able to reduce your insurance costs.
How does it work?
The main way insurers offer specialised low-mileage car insurance is with a pay-as-you-go car insurance policy. This involves having a tracking device fitted to your car to measure how far you drive.
It ends up being cheaper because the less you drive, the less likely it is you’ll be involved in an accident. As the risk is lower, your car insurance premiums come down.
You normally pay a fixed annual fee when you start the policy as this will cover your car against theft, vandalism or accidental damage while it’s parked. You’ll then be charged a per-mile rate and you pay this for each mile you’ve driven at the end of each month.
Your insurer will send you a tracker, which should be easy to plug in, and this will record your mileage and send it to your insurer. You can review this in your pay-as-you-go car insurer’s app or on its website (if it offers this).
Some insurers offer a mileage limit and allow you to top up in 1,000-mile blocks, while others let you pay just for the distance you’ve driven every month.
Should you need to make a claim on your policy, you claim in the same way as you would for a standard policy, and you’ll need to pay an excess fee.
Who can benefit from low-mileage car insurance?
Low-mileage car insurance coverage isn’t the right solution for everyone. If you use your car for your daily commute or to travel long distances, for instance, it’s likely you’ll be better off with a regular policy.
But a low-mileage insurance policy may be just the ticket for more occasional drivers, including:
- OAPs who don’t often travel
- Employees who live close to work
- Second car owners
- People who rideshare to work
- Classic car owners
If, however, you choose to go for a standard car insurance policy, you’ll need to estimate your mileage.
How to estimate your mileage
If you choose a standard car insurance policy, it’s important to estimate your annual mileage accurately.
Slightly underestimating is unlikely to result in much of a saving, but putting down a significantly different figure could have unwelcome consequences – including invalidating your policy if you need to make a claim, or even being charged for insurance fraud (although this is only in the most serious cases).
It’s not always easy to estimate how much you’ll drive in a year, especially if you’re doing it for the first time. Car insurance companies do understand this, so they usually allow some flexibility.
To give yourself a helping hand, take a look at your MOT certificates, which list your vehicle’s mileage at the time it was tested. As the tests are annual, you can get a reasonable idea of how far you’ve driven every year of ownership.
Factor in any major driving holiday plans and changes of circumstances. If you’ve recently moved job or house, your commuting distance will probably change. Likewise, if friends or family move, you may see a change in mileage according to how often you visit.
Compare car insurance policies with MoneySuperMarket
Always compare different low-mileage car insurance policies to get the best deal for you, ensuring you know exactly what you are going to get from the provider, how you will be charged, and whether you can take the black box with you or not.