Carina Diaz
What happens if you exceed mileage on insurance? – this is the question everyone asks once the end of the year approaches. Annual mileage is closely related to insurance premiums, which is why people get so nervous if they exceed the number they indicated initially.
However, exceeding mileage on insurance isn’t as problematic as it might seem initially, especially considering the fact that agencies don’t really limit how much you should drive throughout the year. But it’s still crucial to estimate your annual mileage accurately so that the insurer can calculate your premium properly.
To avoid confusion, it’s always better to understand how auto insurance works from the very beginning.
Today we’ll discuss the relationship between mileage and insurance. We’ll also explore what’s going to happen if you exceed insurance mileage limits and what you should do in that situation.
Are mileage and car insurance related?
Mileage and car insurance are closely related. In fact, the majority of insurance companies will ask you to provide annual mileage when you’re filling out initial documents.
But why is it important to disclose how much you drive throughout the year? – well, insurers have to calculate your monthly payments somehow, right? They need to estimate how much risk you pose to them.
In other words, they try to evaluate how likely you are to get into a car crash and file a claim. The more you drive, the more time you spend on the road. Therefore, the chances are you’ll get into an accident and ask the insurer to cover the expenses for the damage.
Consequently, if you drive a lot, your premium will be more expensive compared to those who don’t drive that much.
For this reason, it’s important to estimate your annual mileage accurately. If you state a lower number intentionally, you might get into serious trouble.
You might believe that nobody will examine your odometer to verify the annual mileage. However, certain states oblige the insurers to check annual mileage religiously.
On the flip side, if you overestimate your annual mileage, you might pay more and end up wasting a lot of money.
While it mightn’t be the end of the world if the car insurance mileage limit is exceeded, it’s still important to know how much you drive throughout the year on average. That way, you’ll not only avoid legal trouble, but you’ll also get the chance to pick out a more tailored insurance package.
After all, there are plenty of choices for both low and high mileage drivers.
How do insurance companies calculate your premium?
Insurance companies use the following factors to calculate your premium: the age, where you live, how much you drive and why, your previous driving records, and details about your vehicle.
The age
Since younger drivers are considered to be riskier, their premiums are sometimes more expensive. Certain companies might ignore this feature altogether, but some insurers still choose to base their claim-related expectations on age.
Location
Yes, your location can impact your premium as well. If you live in an area that is known to have a higher crime or theft rate, your monthly payments will be higher.
You should also know that insurance rates differ significantly from one state to another. Therefore, local laws, regulations, and practices are usually thrown into the equation as well.
How much you drive and why
As mentioned above, how much you drive is particularly important for calculating your premium. The more time you spend on the road, the more expensive your premium will be.
Also, monthly payments are calculated based on the purpose of your driving as well. You might be asked whether you use your vehicle for business or personal reasons.
Driving records
If you want to know what happens if the car insurance mileage limit is exceeded, you should remember that your driving records will affect your premium as much as mileage. If you get tickets every single day or you’ve filed a claim countless times before, you’ll be slapped with a higher premium without a doubt.
The details about your vehicle
The make, model, and year of your car might affect your monthly payments as well. A limited-edition sports car or a luxury vehicle will be more expensive to repair. Insurance companies won’t cover that amount out of their pockets, thus your premium will be higher.
What happens if you exceed mileage on insurance?
If you’ve exceeded a mileage limit, you might not be able to file a claim or get an amount that you expected.
So, what happens if you exceed mileage on insurance? – you might invalidate your policy and be forced to face the consequences. Insurance covers the miles that you initially stated. This means that you might have trouble making a claim if you damage your car after exceeding the estimated annual mileage.
Whether you’re allowed to make a claim or not is completely up to the insurance company. Some of them might not let you file a claim, while others might simply reduce the amount you’re able to claim.
Either way, you might end up wasting all the money you paid throughout the year.
In certain situations, the insurance company might ask you to compensate for the difference if you exceed the stated mileage. They’ll calculate how much you’d have to pay for the mileage you have currently, what you have paid throughout the year, and ask you to cover the difference between those numbers.
With that being said, you should remember that exceeding mileage on insurance just a little bit won’t affect your premium. If your stated mileage is 10,000 and you drive 10,020 the chances are nobody will care.
Regardless of what happens in such situations, you should never attempt to lie about mileage. As I’ve mentioned above, many companies check mileage directly on the odometer. Therefore, there’s no point in lying about mileage.
How can you avoid exceeding mileage on insurance?
Here’s what you can do to avoid exceeding your annual mileage:
- Estimate your annual mileage accurately: naturally, you won’t exceed anything if you state a correct number initially. You can do this by remembering how much you drove in the previous year. You can also use a calculator that will estimate your annual mileage for you. Don’t forget about any long-distance trips you’re planning in the coming year;
- Track your mileage: unless you have a brand new vehicle, it probably has a certain number on the odometer. It could be quite hard to track mileage just by checking the odometer every once in a while. It’s better to mark your mileage at the beginning of the year and check how you’ve increased those miles occasionally.
That way, you’ll be able to spot if you’ve traveled too much and adjust your driving accordingly. If you do that, you won’t have to wonder what happens when the car insurance mileage limit is exceeded.
- Avoid driving when it’s not necessary: it’s easy to be careless and lazy when we own a car. We might drive even to the nearest store and thus add unnecessary mileage to the odometer. Walking short distances could significantly help you if you’re trying to avoid exceeding your annual mileage.
- Plan your trips ahead: if you have to run several errands, it’s better to think about their location and plan your trip accordingly. Going from one place to another without considering the overall route can result in excessive mileage.
What should you do if the car insurance mileage limit exceeded?
If the car insurance mileage limit is exceeded anyway, you should notify your insurer and consult your agent to come up with tailored solutions.
By being open about your mileage, you’re showing the insurance company that you really didn’t mean to understate the annual mileage. You could also explain what changed and why you exceeded the numbers you stated initially.
If you do so, they might offer to upgrade your policy in exchange for a small fee. The new policy might have a more expensive premium just because you’re driving more. Increased payments might scare you, but, trust me, paying slightly more is better than invalidating the policy and losing the right to make a claim.
Final takeaway
It’s easy to exceed your annual mileage, especially if you don’t track how much you drive. However, it’s not the end of the world if the car insurance mileage limit is exceeded.
If you exceed the estimated annual mileage slightly, you probably won’t have to pay anything extra. But if the difference is significant, it’s better to notify the insurer and come up with an action plan with your agent.
More often than not, you’ll be able to upgrade your policy if you notify the company about exceeding mileage. If you don’t, you might invalidate your insurance and lose the right to make a claim.
You can also avoid paying extra money by being mindful of your driving habits.
Sources: https://www.investopedia.com/why-is-my-car-insurance-so-high-5184739
