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Should lower mileage mean lower premiums?

As car insurance costs continue to rise, we’re all looking for ways to keep our premiums down. There are a few ways you can do this – get a less expensive car, get a less powerful car or, more intriguingly, cut down on your annual mileage. Yes, if you commit to covering less miles over the course of 12 months, you can expect your car insurance premium to fall. But is this fair?

A quick insurance premium lesson first – all insurance is based on risk and the amount of risk the insurance company thinks you pose. If they think you are statistically more likely to have an accident and therefore cost them money in repair costs, they are going to charge you more. Likewise, if you have a car that is costly to fix, they are going to charge you more because if you have an accident, your Ferrari is going to cost them way more to fix than a Ford Focus. Based on those principles, if you are a teenager driving a high powered expensive car, it makes sense that you are going to be paying more than someone with 20+ years of driving experience driving a ‘standard’ family saloon.

But why should someone driving 6000 miles a year pose less of a risk than someone doing 12000 miles? Is it fair that they automatically get a discount simply for being out on the road less? Obviously, someone driving less mileage is going to be on the road for less time and therefore they are less likely to have an accident than someone who is driving for three or four hours a day. But what kind of person is the lower-mileage driver?

OAPs are one group that traditionally do a lot less driving than other groups, but are they really safer drivers than everyone else? Many may be beginning to find driving more stressful and may have undiagnosed issues or reduced response times that actually make them more dangerous drivers than many of the groups more traditionally viewed as higher risk.

Another group that, on the face of it, looks like they will be lower risk is stay-at-home parents. They might only use the car for doing the school run or nipping to the supermarket and so do minimal mileage each day but let’s just think about the type of driving they are doing for a moment – the morning school run has to be done during rush hour, normally on congested roads in towns or cities. Are they really less likely to have an accident than someone who drives twice as far each day but on a quiet country road?

Whatever the argument about who poses the higher risk, it is still the case that most insurance companies will offer reduced premiums for reduced mileage. If you are looking to save money on your insurance quote, think about limiting your mileage for the year and see just what saving you can achieve.

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