Consider drive less, pay less insurance

Given the constraints of virus lockdowns and worries over health and safety, the bulk of your automobile use may be from grocery store runs these days. Regardless of where you have gone in the last several months, you’ve probably driven less than you did prepandemic, and that pattern could continue for many weeks or months to come.

With reduced driving, you may be wondering if you can reduce your auto insurance payments. Here are some ways you can potentially save money. (But when reviewing insurance policies, always read the fine print. Some come with stipulations.)

Pay for miles you drive. Pay-per-mile policies differ from standard auto insurance in that the premium is based on how many miles you drive. Yes, standard policies offer a low-mileage discount, but payper-mile goes beyond that.

Metromile, an Arizona company, offers a pay-per-mile policy with a monthly rate starting at $29 and an additional charge of 6 cents for each mile driven. Mileage is tracked by a small device that plugs into the car’s OBD-II diagnostic port, which is standard equipment on all light-duty vehicles produced since 1996. The port is easily accessible under the dashboard, and the insurance company provides the device — the car owner simply plugs it in.

Factors including the driver’s age, credit history, driving record and insurance history, as well as the vehicle type, can increase the monthly payments, and pay-per-mile policies may not be available in your state. Metromile’s policy is currently not available in Colorado.

Nationwide also offers a payper-mile plan, called SmartMiles, in 40 states. Like the Metromile plan, SmartMiles determines a base rate and then adds a cost-per-mile amount. Here, too, a device installed in the OBD-II port tracks miles driven. It also records vehicle speed and other factors.

If the policyholder drives with care during the first term, an additional 10% discount can be earned. The discount is applied at the next policy renewal and remains in effect while the vehicle is enrolled in SmartMiles.

Pay for how you drive.

Usage-based policies — such as Farmers Signal, Progressive Snapshot and Geico DriveEasy — track mileage and assess driver behavior to determine rates. In addition to counting miles driven, these policies consider how often you exceed the speed limit, brake hard, and accelerate or corner aggressively. Most insurers monitor the driver’s cellphone and penalize those who talk or text while driving.

The policies generally provide a 10% discount on sign-up, although some state regulations limit the initial discount to 5%. Additional discounts are awarded based on the observed driving record.

Both pay-per-mile and usage-based insurance policies require allowing your insurance company to monitor vehicle use. You may get a discount but sacrifice privacy.

Stay and save.

Do you expect to continue to drive infrequently? You may qualify for a low-mileage discount on a standard policy with your current insurer. You may be asked to verify mileage; maintenance records can help. Raising your deductible will reduce your premium as well.