When you buy car insurance, the insurance company asks you many questions to calculate your premium. They’ll ask you for your age and marital status, your driving experience, your vehicle type, and how often you drive your vehicle.
The distance you drive is an important consideration when an insurance company calculates your premiums. The more you drive, the higher the risk. Answering the questions on your insurance application form is very important as it affects your coverage. However, it’s not always straight forward.
For instance, your insurer may ask if you use your car to commute or for pleasure. Unfortunately, they don’t always clearly define which is which, and commuting for one person can be much different for another.
Obviously, if you drive to work every day, you commute and often times, pleasure coverage only applies to a second vehicle that is used less frequently. “Pleasure driving” does lower your premiums, but if you claim you drive less than you do, the insurance company may void your coverage when it comes time to make a claim.
Typically, pleasure driving applies to a vehicle driven less than 2000 miles per year or for a vehicle driven to work or school daily, but less than 2 miles one way. This is a general rule but the specific definition of pleasure driving may vary between insurers.
Another questionable scenario include carpooling once a week to work or driving your car a short distance to a commuter train. Is this commuting or pleasure driving?
Thankfully, many insurance companies now ask other questions to provide accurate quotes and effective coverage. For instance, they may ask you whether you’re insuring a primary vehicle (the one you drive most often) or your secondary vehicle (the one you drive least often). They may also ask how many miles you drive annually.
Don’t leave the details to chance. If you’re unsure, discuss your policy with the insurer. Ask for clarification regarding what constitutes commuting and pleasure use. The same applies to definitions regarding primary and secondary vehicles. When you work with a local insurance agent, you have a trusted representative who can review your policy options with you.
Another advantage of a personal review is you may be able to get a low mileage discount if you drive less. When you drive your primary vehicle, but don’t drive very much you still need appropriate coverage. However, driving less means fewer risks, so insurers often offer discounts to customers. The people most likely to qualify for this discount are retired seniors, people who carpool, students who only drive to school and back, and sometimes people who own more vehicles than the number of licensed drivers in their household.
According to a Quadrant Information Systems study, people who drive 5,000 miles or less annually pay an average of 8% less for insurance across all states. Nonetheless, according to a Princeton Survey Research Associates study, only 16% of drivers talk to their insurance company about discounts and only 18% ever let their insurance company know when they drive less.
Don’t leave discounts and lower premiums sitting on the table. Discuss your insurance needs with your local insurance agent and rely on their expert advice. At the very least, read the fine print before you buy. You don’t want to find you’re disqualified when you need to claim.