Your guide to low-mileage car insurance

Low-mileage car insurance is a special type of car insurance policy that covers drivers who only drive a short distance each year. It normally works out cheaper if you use your car infrequently, since the less time you spend driving, the less likely you are to have an accident.

In order to understand whether this type of policy is right for you, we’ve put together a guide to low-mileage car insurance. 

What is low-mileage car insurance?

There are a number of different types of low-mileage car insurance policies, but they are all tailored towards drivers who don’t spend a lot of time in their car. If you’re not spending a lot of time on the road, the logic is that you’re less likely to be in an accident and your car won’t experience as much wear and tear. This means that your premiums will generally be lower.

When you quote for standard car insurance, your insurer will ask you to estimate your annual mileage and provide an indication as to how you will use your car. These factors are then used to determine the cost of your policy for the year.

According to the Department for Transport, the average annual mileage per car is approximately 6,600 miles. So it would make sense to think that if you are driving fewer miles than the average motorist per year, you might qualify as a low-mileage driver. However, insurance providers tend to set their own thresholds for low-mileage driving so it’s best to chat to your insurer rather than make any assumptions.

There are a number of benefits to low-mileage car insurance, but the main one is price. If you don’t drive often, your policy can be significantly cheaper since you’re generally less of a risk to insurers. It also means that you have a policy that is tailored to your use rather than a more expensive “one-size-fits-all” policy.

The different types of low-mileage car insurance

If you think you might qualify as a low-mileage driver, there are a number of different types of low-mileage insurance that you can consider.

Standard insurance

Whenever you take out any car insurance policy, you will be asked to estimate your annual mileage. This is then taken into account when your insurer calculates your premium. If you are only intending to drive short distances and estimate a low mileage, your insurance premium may be cheaper just because of your low estimation, so you might not have to take out a specific low-mileage policy. However, it’s important to estimate your mileage truthfully and accurately.

Telematics insurance

Telematics insurance, which is also known as black box insurance, is a type of insurance policy that uses a device fitted to your car to monitor your driving behaviour. It gives insurers information on your driving performance and mileage, which can ensure that you get an insurance policy that is tailored to your driving. Some telematics policies come with a mileage limit set by you or your insurer, and some insurers will offer discounts for staying below the limit. It is worth noting that some insurers have criteria that you must meet, such as age or licence type, in order to qualify for telematics insurance.

Pay as you drive insurance

Pay as you drive (PAYD), or pay-per-mile insurance, uses a telematics device to see how far you are driving and adjust your premium based on your mileage. Generally, you pay a fixed base rate premium which covers your car when you’re not driving, then you pay a variable amount depending on your mileage per month. If you drive less, this variable amount is lower and your premium is lower overall. These rates are determined by similar factors to standard car insurance quotes, such as your age, where you live, and the type of car you drive.

Other policies

There are a range of other policies that you can consider depending on your circumstances, which include:

• Student car insurance: If you’re only driving during specific times of the year, such as the university holidays, student car insurance might be best for you.

• Senior car insurance: If you’re over a certain age (for some insurers, it’s as low as 50, for others, it’s 60 or 70 years), certain providers may offer special policies since you may be using your vehicle less than average.

• Short-term car insurance: Short-term insurance might be an option if you’re only using your vehicle occasionally and the rest of the time it is off the road. Some policies allow you to insure it for as little as a few hours. Bear in mind that if you take short-term insurance for a few weeks, it may be cheaper to get an annual policy.

• Learner car insurance: If you're learning to drive it’s likely that you will do a lower mileage than a qualified driver. Learner insurance might be best for your needs.

With all of these policies, it’s important to note that your car legally needs to be insured even when you’re not driving it. If you are not intending to insure your car for long periods through the year, you must declare the car off the road using a SORN declaration.

How to estimate your mileage

When you estimate your mileage, insurers will generally want a ballpark figure rather than anything exact.

The easiest way to estimate your annual mileage is to work out the number of miles that you drive in an average week, and multiply that by 52. You should consider all regular journeys that you might make, including:

• Commuting to work or college
• Driving to the supermarket and running errands
• Socialising
• Care commitments that you might have

You should also include an estimate of miles that you might drive on a longer road trip or a holiday. This may be easier to add to your annual estimate. You might also want to add a bit for contingency.

An example calculation could be:

5 miles driven per day x 7 days = 

35 miles driven per week x 52 weeks = 

1,820 miles driven per year + 500 contingency and holiday miles =

2,320 miles per year

For extra contingency and simplicity it can be a good idea to round this estimate up to the nearest 500 — so in this case, 2,500 miles per year.

You can also use the annual mileage recorded on past MOT certificates, though you should make sure to factor in any changes in circumstances to your final estimate.

Again, it’s really important to make sure that you don’t misreport or underestimate your mileage, as this could cost you later. For example, if you have an accident and your insurer thinks that you have misled them about your annual mileage, they may not pay out your claim.

What to do if you exceed your mileage

If you have a low-mileage insurance policy and you think you will exceed your annual mileage, you must notify your insurer. They may charge an additional premium.

It’s important to let your insurer know as soon as possible. If you have an accident and it turns out that you have exceeded the low-mileage threshold before telling your insurer, they may charge an additional fee.

The good news is that if you drive less than your permitted mileage with a low-mileage policy, your insurer may allow you to carry those miles over to the following year, or offer you a partial refund.

Before we wrap up, let’s look at a few FAQs you may have.

Low-mileage car insurance FAQs

Are low-mileage policies always cheaper?

No, low-mileage policies aren’t always cheaper. Insurance policies are calculated on a number of factors. Mileage and usage are important factors, but so are your age, the type of car you drive, and where you park your car at night. So it’s important to check with your insurer.

Do I have to report my mileage throughout the period of my policy?

You normally only declare the reading from your odometer at the beginning of your policy, and on renewal. However it’s important to get the reading accurate to avoid any difficulties if you have to claim.

How might my usage of my car affect my policy?

There are different classes of use that insurers use to help calculate your premium. They are:

• Social, domestic and pleasure (SDP)
• Social, domestic, pleasure and commuting (SDP+C)
• Personal business use (SDPC + business use)

It’s important to make sure your policy covers the right use for your circumstances. You can find out more about classes of use here.

I have a classic car, are these covered by low-mileage policies?

Classic cars can be covered by low-mileage policies, especially if you’re not using your classic car as your everyday vehicle. Many insurance companies have specialist classic car insurance which may get you a lower rate, since classic cars are typically well looked after and deemed less likely to be involved in a claim.

How Howden can help

As an insurance broker, we do the hard work to find you a policy that works for you. We know that our customers are individuals, so we get to know you to make sure that we can tailor car insurance to your needs.

For all of your car insurance needs, including low-mileage car insurance, contact us today.

Also read:

• What mileage is good for a used car?
• What is the National Mileage Register?
• Car insurance groups [A complete guide]
• CAR INSURANCE GUIDES