Lowering auto insurance costs through less driving miles
It seems like everyone's expenses, including car insurance, are skyrocketing these days. However, not everyone needs to change their insurance plan. For instance, if you drive less than you've claimed, you could be saving some bucks. Surprisingly, 49% of German drivers have never adjusted their annual mileage limit in their insurance policy, according to a survey by "Finanztip". If you honestly tell your insurer that you drive less, they might reduce your premiums, especially if your declared mileage was higher than your actual usage. On average, people end up paying 16% more if they've indicated 10,000 kilometers but have driven only half that distance.
If you've drove significantly less than what you've claimed, it's wise to update your insurer. Many insurance companies allow you to change your mileage limit for the current year without needing to renew your policy. Most insurance policies provide mileage limits in steps.
Reporting lower mileage
Inform your insurer in writing, either by email or letter, about your lower mileage. Make sure to get a receipt as proof. Kathrin Gotthold, from "Finanztip", advises not to renew your policy immediately and be cautious with credits for the next year because that would bind you to your current insurer. Additionally, it's important to specify that the reduced mileage limit should apply retroactively for the current year.
If you've been with the same insurer for more than a year, you might also ask for a refund for the current year if you've driven less every year.
Further savings with lower mileage:
- 5,000 kilometers cost approximately 7% more than 2,000 kilometers
- 15,000 kilometers cost approximately 9% more than 10,000 kilometers
- 20,000 kilometers cost approximately 14% more than 15,000 kilometers
- 25,000 kilometers cost approximately 13% more than 20,000 kilometers
It's not advisable to initially claim a significantly lower mileage. Drivers should estimate their mileage realistically but cautiously. While it's always possible to add additional kilometers, most insurers are lenient if you only slightly exceed the agreed annual mileage. However, if the deviation is not just a few kilometers, an additional annual premium might be imposed in the worst-case scenario. The insurer will also recalculate the premium and demand additional payment.
"Car insurance usually doesn't check if you've actually driven the stated kilometers or if you've stayed within the limit," says Gotthold. However, if an accident occurs or a claim is made, the insurer will also check the kilometer reading.
When should I report additional kilometers?
"It's advisable to report additional kilometers as soon as it's foreseeable that you'll drive more and you can estimate how much," advises Gotthold. Then, you'll also know whether and how much the insurance will cost more. At the latest, you should report additional kilometers just before you actually exceed the limit – because otherwise, you could face troubles if the insurer discovers the additional kilometers on their own." So, keep track of your annual mileage. Because more than every third driver (36%) now finds the car insurance contract a financial burden.
How can a new driver or insurance beginner estimate their kilometers?
If you're new to driving and unsure of your mileage usage, it's hard to give an accurate figure. Gotthold suggests a simple rule of thumb for beginners: add the kilometers you drive weekly and multiply that sum by 60 to get an annual estimate. This way, you'll have a bit of a buffer.
If you've been underestimating your annual mileage in your 'Insurance of motor vehicles', updating it could potentially reduce your premiums. After being with the same insurer for over a year, you might also request a refund for the excess kilometers you haven't driven.
