March 19, 2019 at 1:11 PM
Motorists in the UK who drive less may be paying more for their car insurance than those who accumulate a higher mileage. You may expect that driving less would lower the risk of accidents and thus reduce your premium, but findings actually suggest the opposite. New research from the pay-as-you-drive car insurer By Miles indicates that people who drive between 5’000 and 6’000 miles a year could be paying £200 more than someone driving twice as much.
The study analysed 2.5 million car insurance quotes on MoneySuperMarket between 1 July and 30 September 2018, and found that lower mileage drivers can be paying up to £389 more for their car insurance than higher mileage drivers. This is because payments from lower mileage drivers are being used to subsidise the cost of insurance for high mileage motorists.
Motorists who say they drive between 5’000 and 6’000 miles a year are being charged an average of £233 more than those who drive 12,000 miles per year. The Department for Transport reported the average UK mileage as 7’134 miles, meaning that up to 19 million motorists could be impacted by this policy. And even when controlled for other factors, the disparity in cost remains. For example, the most experienced drivers are also over-charged, with 50-64-year-olds driving 5’000 miles a year paying £100 more than those driving 11’000-12’000 miles. Plus, motorists with 6 to 8 years of No Claims Discount who drive 5’000-6’000 miles a year are still charged £100 more than those driving 10’000-11’000 miles a year. In fact, only the drivers with the least or most experience (17-19 and 65+ year olds) saw cheaper quotes for lower mileages!
James Blackham, the co-founder of By Miles, said that “those who don’t drive as much are being treated unfairly. They’re being charged more to subsidise the insurance of higher mileage drivers.” He added that “this needs to change. If you don’t use your car much, it doesn’t make sense to charge you the same as a longer distance driver as the odds of you having an accident are significantly lower.” Matt Wood, the head of pricing at By Miles, added to this sentiment, saying that “it stands to reason that less experienced drivers should be charged more, but if someone’s been driving for 20 years, whether they now drive 3’000 miles or 10’000 miles a year is going to have little impact on their driving ability.”
In terms of making a decision on your insurance, the Association of British Insurers reminded motorists that estimated annual mileage can be a relevant factor for insurers, but a range of other ones are also taken into account when assessing the cost of car insurance. These include the driver’s age, their claims record and driving history, the type of vehicle, and how the vehicle will be used. Thus, it is always important that drivers shop around to ensure they get the right policy for their needs.
There are limited mileage policies, but these can be troublesome – figures from uSwitch show that 27% of UK motorists take a wild guess at how far they drive when getting a quote, thus putting them at risk of losing money and either under- or over-estimating their true mileage. If you are worried about your low mileage, you could also look into black box insurance – which calculates your premium based on how you drive through a GPS box. It takes into account factors such as braking, cornering, steering, speed, the time you drive, and mileage. It can lower costs – it’s especially helpful for younger or older drivers who are penalised with higher premiums, however if you drive often and for long distances it can mean you pay more. Thus, it is always important that you research your options before deciding on a car insurance policy.
Overall, at the moment motorists can be taken advantage of by insurance companies through inflated premiums for those who do not clock up as high a mileage. When searching for a policy, if you are a low-mileage driver you should take this into account, and be sure to shop around to find the best policy for you. Car insurance can be tricky, but it doesn’t have to cost an arm and a leg!