Get Rewarded for Driving Less

Rising gas prices might be causing you to drive a lot less than you used to. If that's the case, you could be in for some serious savings on your car insurance. A growing number of insurance companies are helping consumers lower their rates with pay-per-mile or low-mileage discount programs, which is similar to leasing an automobile. If you're racking up less than 15,000 miles annually, it might be time to contact your agent. Each mile you don't drive is less risk for you, as well as the insurance company. If you stop driving to work or decrease your mileage in other ways, you may see savings up to 30%, says Bob Hunter insurance director for the Consumer Federation of America.

Like auto leasing, under the pay-per-mile or low-mileage discount programs, drivers pay only for the miles they drive. To qualify for this type of program, companies such as Progressive, which offers this low-mileage discount in four states, require a small monitoring device to be installed inside your vehicle to track your mileage. General Motors Acceptance Corp. (GMAC), which currently offers low-mileage insurance in 34 states on 2004 and newer GM vehicles equipped with OnStar technology, will automatically monitor the mileage of its insurees.

Just for signing up for these low-mileage programs, new Progressive drivers automatically receive a minimum 5% discount, while new GMAC drivers receive a 26% discount. Furthermore, GMAC drivers accumulating less than 2,500 miles annually on their vehicles could receive a whopping 54% discount.



Insurance companies that don't require an electronic monitoring device generally offer discounts for drivers showing less than 7,500 miles annually on their cars' odometers. Drivers are either on the honor system, or they may be required to visit an agent. Allstate and Farmers offer discounts, in select states, of as much as 25%. Farmers provides discounts (varying by state) up to 25% to drivers who do not drive their cars to work. In addition, if you're insured by State Farm, a 12% to 18% discount will be applied if you've maintained low mileage for one year.

Since there is no uniform insurance policy from state to state, "check with your insurer first about whether a low-mileage discount plan may already be available. Otherwise, shop wisely, compare rates, or consider a higher deductible. Additionally, your state insurance commissioner's office and the National Association of Insurance Commissioners offer a publication entitled Consumer's Guide to Auto Insurance," says Walter Bell, commissioner of insurance for the state of Alabama. Log on to insurance.com for more information on low-mileage discount programs.

With gas prices rising again, we thought it would be appropriate to reprint this article, which was written by the editor of JeffCars.com,  for Black Enterprise magazine in September 2008.