Auto Insurance Rates Are Directly Impacted by A Driver’s Daily Commute: Report

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It turns out that a driver’s daily commute relates directly to the amount they pay for auto insurance, according to a new report.

For their survey, InsuranceQuotes teamed up with Quadrant Information Services to analyze the economic impact annual miles driven has on the cost of a person’s auto insurance. They found that in general, while cars with higher mileage equate to a higher premium the driver must pay, this trend isn’t always the same nationwide.

The study found the following link between mileage and insurance rates:

 

    • From 5,000 miles to 20,000 miles — 9% hike in insurance rates.

 

    • From 5,000 miles to 15,000 miles — 8.4% hike in insurance rates.

 

    • From 5,000 miles to 10,000 miles — 7.1% hike in insurance rates.

 

But, even though this was the average rate increase, it varied dramatically per each state. For example, California residents who increased their annual miles driven from 5,000 to 20,000 would experience a 26% price hike, but those who increased by the same amount in North Carolina wouldn’t see a change at all.

Interestingly enough, when drivers actually decreased the number of miles driven,
they didn’t experience the same savings that one would expect. Again, using California drivers as an example, drivers only received a $207 annual savings when they went from driving around 20,000 miles to just 5,000 a year.

With these results in mind, industry experts are quick to explain that there is a lot more that goes into figuring out auto insurance rates than just the miles driven. And while some people believe that having auto accident claims on a driver’s record is the main reason why rates increase, considering that on average a driver will have an auto accident claim only once every 17.9 years, this isn’t always true.

John Espenschied, an auto insurance expert, explained to the study’s authors:

“Everything in the insurance industry is based statistics — the age of a driver, the type of vehicle he or she drives, the zip code where a vehicle is garaged, and miles driven per year. All are statistics used to determine risk,” he says. “More miles driven simply means a higher potential of being involved in an accident, which means you’re going to pay more for insurance.”

So with this in mind, Espenschied cautions drivers to make sure they are paying attention to their rates and that they are only being increased when they need to be.