How many miles do you drive every day on your way to work, school or wherever it is you’re going?
Your answer might be too much in some states and it could be driving up your auto insurance rate.
10 states that penalize you for driving
According to TheStreet.com, a recent survey from a leading insurance site found that a driver who only logs 5,000 miles annually will pay 8.61% less on average than another driver who puts the pedal to the metal for a total of 15,000 miles a year.
How normal or abnormal is it to drive 5,000 miles or 15,000 miles annually, for that matter? The Department of Transportation says the average American drives 13,476 annually. So that puts it into perspective for you.
Some states will automatically set insurance rates higher for those who drive more. These 10 have the highest percentage increase in insurance premiums between mega-milers (15,000 miles/year) and leisure drivers (5,000 miles/year).
- California: 26.15%
- Alaska: 10.45%
- Washington, D.C: 10.2%
- Alabama: 9.82%
- Massachusetts: 9.79%
- Hawaii 9.67%
- Virginia: 9.46%
- Maryland: 8.91%
- South Carolina: 8.70%
- Louisiana: 8.42%
On the flip side of the ledger, it’s important to note that some other states either don’t allow insurers to raise rates based on miles driven or they minimize how much importance that metric can have in setting rates. These states include:
- North Carolina – 0%
- Utah – 1.02%
- Rhode Island – 1.28%
- Texas – 2.81%
- Connecticut – 2.84%
If you’re paying a high premium simply because of the amount of miles you drive, you’ve got some homework to do. It’s your job to shop the marketplace and find a lower rate! Here’s how to get started:
Begin by identifying solid companies
Clark has long talked about the merits of Amica Mutual and USAA. But those aren’t the only two companies you should look at. Consider buying a one-time subscription to Consumer Reports and checking their latest list of the best auto insurance companies to find others that should make it onto your shortlist.
Get your quotes
Once you have a list of candidates, you’ll want to start getting quotes. This typically takes around 15 minutes on the phone per insurer. Have your most recent policy in front of you in case any questions come up about the make and model of your vehicle(s).
Working with an insurance broker is another option. He or she will get multiple quotes for you and you’ll have access to all the insurers they do business with. It’s an easy one-stop shop that lets you still have the flexibility of comparison pricing.
Once you get the quotes back, it’s time to compare them. Each quote should be based on the same amount of coverage so you can do an apples-to-apples comparison. What if a poorly ranked company offers you a great quote? Clark says to avoid them! While the premium might be tempting, you want to be sure your insurer is there for you when the chips are down.
Know when to drop comprehensive and collision
The general rule is when the cost of comp and collision exceeds 10% of your old vehicle’s value, that’s the time to dump it and just have liability coverage. You can determine your vehicle’s value at Edmunds.com, KBB.com or NADA.com.
So let’s take a simple example. Say your vehicle is worth $4,000. If you’re paying anything more than $400 annually (that’s 10% of $4,000) for comp and collision, it no longer makes any financial sense. One notable exception to this rule: If there’s no way you could financially cover the loss of your vehicle, forget the math and keep paying for comp and collision.
Be prepared to take a higher deductible
You should always opt for a $1,000 deductible for the best savings on your policy. At that level, you’ll pay a lower premium and won’t be tempted to file any small piddling claims.
Don’t forget about discounts!
The Insurance Information Institute reminds you that there are a ton of different discounts out there. Here are some you can ask about:
- Antitheft devices
- Multiple policies with the same company
- College students living away from home
- Defensive driving courses
- Drivers ed courses
- Low annual mileage
- Long-time customer
- More than one car
- No accidents in three years
- No moving violations in three years
- Student drivers with good grades