Does Driving Less = Reduced Insurance Premiums?

January 24, 2023


When you’re looking for ways to reduce your overall costs to stay on budget, a lot of people look to their insurance premiums. Insurance is a necessity, and mandatory in the province of Ontario if you want to operate your vehicle legally on public roadways, but a lot of people don’t like the price tag that comes with. There are ways you can reduce costs, like asking about eligible discounts, taking a defensive driving course – but what about simply driving less?

During the COVID-19 pandemic, many individuals who would typically rack up most of their kilometers driving to and from work reduced how much they drove per day considerably. Stay-at-home orders meant working remotely, and “socializing” wasn’t really a big thing, so a lot of people had little to no use for their vehicles. Did driving less impact their premiums? The answer – well, a little.

How much does driving distance impact your insurance rates?

Statistics show that driving less means a lower chance of being involved in an accident, and therefore having to make a claim to your insurance company. So, yes, ultimately driving less will reduce your insurance premiums, but driving 5,000km/year versus 25,000km/year might not make as big a difference as you think it does.

For virtually all insurance companies, your total kilometres and your typical daily commute will be factors in your pricing. Say, for example, you only use your car to get the bare necessities, like groceries once or twice per week. Ultimately, this would mean you maybe drive annually between 1,000km-5,000km. The savings in this range would stretch between 70% (at the lowest of 1,000km/year) and 30% (for 5,000km/year.) That’s already a big difference with only 4,000km between the lowest and highest range. What about those of us who use our vehicles everyday for our commutes, or to go visit friends or family on the other side of town? Is there any way we can reap savings from driving a little bit less?

For those of us who drive 11,000km/year or more, there’s no savings opportunity. The average driver in Ontario’s typical mileage is around 16,000km, so you can expect that very few of us are getting a reduction on our premiums for “low mileage.”

How do I know how many average kilometres I drive per year?

Figuring out your average number of kilometers driven each year isn’t that hard. Just use these steps:

  • Determine your total km for your work commute and multiple that number by 2 (once for there and once again for coming home after work.)
  • Say, as an example, you drove 20km each day to work, and you worked 5 days out of the week. You’d multiply 20 by two, and then again by 5. That would be 200km/week.
  • Now, figure out how many km you drive on weekends (roughly) and multiply this by 104 (how many weekend days there are in a year.) Account for vacations and driving habits in the summer/winter. There’s bound to be some rough estimates.
  • Add this to the number of your km/week x 52. Say you drive 15km on Sundays to visit family and 20km on Saturdays to take the kids to soccer practice. With the previous average, 200km/week, that would come out to 12220km/year.

If you drive under 11,000km/year, you can qualify for discounts, but less than half of Ontario’s population uses their car so little. That being said, if you do drive only a few thousand km/year, it’s a good idea to call up your insurance provider to discuss options with them.

Other ways to reduce your auto insurance costs:

The unfortunate reality of driving less is that you’d have to drive under a certain threshold to qualify for a low km discount, and not all of us can do that. We live too far from our jobs, have kids we need to take to school and after-school activities, etc. – so what do we do if we still want to reap the benefits of savings? There’s a few other ways you can lower your auto insurance costs.

Here are our suggestions:

  • Enlist an Excalibur broker to help you shop around. Prices for auto insurance vary from company to company, so it’s advised you get multiple quotes (which we can get for you without any additional effort on your part!) from different providers to see the difference. A broker works for you and has access to the best insurance markets, so they’ll be sure to get you the best prices.
  • Ask about higher deductibles. As long as you’re comfortable with paying more if you have to make a claim, a higher deductible will directly decrease your premiums.
  • If you’re still in the market for a car, take insurance costs into consideration. Car insurance premiums are based on purchase price, the cost it would take to repair, its safety rating, and odds of theft. If insurance costs will be a big thing to you, research insurance costs for your prospective model and make of vehicle before you buy.
  • If your car is older and would cost more to repair than it’s worth, opt out of collision/comprehensive coverage. They’re an unnecessary expense at that point.
  • Maintain a good credit score. Some insurance providers use credit score to gauge premiums, so make sure to ask if that’s a thing.
  • Bundle multiple policies. Some providers will also reward returning customers.
  • Ask about other discounts. Different providers will have different options, like rewarding you for taking driver’s ed courses, good credit records, long-time customer, claims-free in 3 years, student driver with good grades, and so on.

If you have any further questions regarding driving distance and your insurance, or you want more tips based on your personal situation to reduce your auto insurance premiums, give an Excalibur Defender a call today, or whenever you need us.