Low-Mileage Discounts

If you have a short commute, don't drive much, or typically rack up fewer than 14,000 miles in a year, you may qualify for a low-mileage discount on your car insurance. These discounts have been around for many years, but modern technology has caused a few changes to how eligibility is determined.

A traditional low-mileage discount is based strictly on the odometer reading from your vehicle. Generally speaking, you will submit proof of the current reading at the time you request the discount from your insurer (or, for new policies, at the time you meet with the agent). You'll also need a second reading 90 days later, from a certified source. Most insurers will accept the printout you get when you have a professional mechanic change your oil. An average amount of mileage is calculated, and if the number is less than 14,000, you'll get the discount, which can range from 3-10 percent, depending on your insurance company and the specifics of your policy.

The modern twist on the low-mileage discount is PAYD, or "pay as you drive." This typically involves a tracking device being installed in your vehicle, which uses telematics (remote data collection) to gather data about how much you drive, and how fast, and transmit that information directly to your insurer. You then get a discount based, not only on miles, but by the perceived safety of your driving habits.

While PAYD sounds like a great idea, it's not offered throughout the country, and some people are not comfortable with the level of tracking it requires.