How Does Distance From Work Affect Insurance Rates? Plus 6 Other Key Factors to Consider

How far you drive has a big impact on how much you’ll end up paying for your car insurance. For many people, a big part of that calculation is their daily commute to work.

While the distance to your job is important, it’s not as impactful as your overall expected driving distance every year. The average driver logs 13,476 miles every year, according to the Federal Highway Administration. And whether you drive more or less than that, transparency is key.

How do insurance companies know how many miles you drive?

It can be tempting to lie about your driving patterns to get a lower rate, but lying about mileage may not work out in your favor. According to one Twitter user, the company that did his oil changes sold his mileage updates to his insurance company.

For Tom Jensen, an engineer in San Francisco, it was an update through CarFax. “The dealership that does my servicing updates my car’s CarFax record every time I take it in,” he says. “And it turns out that the insurance company does some snooping in that record to make sure I’m telling the truth.”

The thing is, Jensen didn’t lie about his mileage. He just forgot to update it when he made a career change and had a longer commute. “It was a little embarrassing,” he admits. “I wish I had remembered.”

A shorter commute pays off

Opting for a shorter commute not only saves you time every day, but it can also save you money. Every insurance company is different, but the following framework can give you a general sense of how much extra you’ll pay per month depending on your commute distance.

Note that these are all figures for a one-way trip:

What else affects insurance premiums?

There are a lot of other factors that go into determining your insurance rates. Here are the six main ones.

1) Your coverage

There are several coverage options from which you can choose. Some are optional, and some are mandatory by law or by your lender if you financed the car. You can also choose different coverage levels, although some minimums do apply, depending on where you live.

2) Your car 

Cars with high vehicle safety ratings are more likely to get low insurance rates. This means that fancier cars that are meant more for speed or looks than safety don’t get great insurance rates.

3) Where you live

Car insurance companies are regulated by state so one may have wildly different rates depending on which state you live in. What’s more, different areas may have higher rates of crime and accidents, which can spike your rate. As a rule, drivers in urban areas pay more for car insurance than those living in rural areas.

4) Your driving record

If you have a history of getting traffic violations or car accidents, the likelihood of you making a claim goes up. As a result, the insurance company will charge you a higher premium to make up for taking on the added risk.

5) Your credit

Surprisingly, people with bad credit tend to get into more accidents. As a result, the insurance company will use an insurance-based credit score when underwriting your application to determine your rate.

6) Your age, sex, and marital status

Young, single males are more likely to make claims than anyone else.

How to lower your car insurance premium

In most cases, there’s not much you can do about your commute. But if you’re planning on moving or changing jobs shortly, consider making a decision that requires a shorter drive time every day. Also, consider using the car less in other situations. For short distances, consider walking or riding a bike.

Another way is to make sure you’re getting as many discounts as possible. One of the big ones is the multi-policy discount. For example, if you have your car insurance and your renters or homeowners insurance with the same company, you’ll get a discount on both.

Most insurance companies offer a bunch of discounts during the application process, but it can pay to call the company to see if there are any you missed.

But hands down the best way to get a lower car insurance premium is to shop around. This is especially the case if you’ve been with the same car insurance company for a while.

Seek out and compare at least three to four car insurance companies to see which offers the best rate for your situation.

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