Annual mileage refers to the average number of miles a car is driven in a year’s time.
What does annual mileage mean?
Thankfully, it doesn’t take a math expert to figure this one out! Every mile that a car is driven adds up, and eventually gets divided by the number of years since the car was manufactured. That number is known as the car’s annual mileage. So if your 2011 Subaru Outback has 200,000 miles on it by 2021, its annual mileage is 20,000 miles.
Annual mileage is important for determining a car’s value and insurance costs, among other things. While your annual mileage can vary each year, the average is usually the important number.
On average, the U.S. Department of Transportation’s Federal Highway Administration (FHWA) says that the average car in America is driven around 13,500 miles per year. This number can vary depending on the region in which you live, your job and other factors. (Your average annual mileage may have gone down if you have been working from home for the last few years, of course.)
Alaska, Arkansas, New York, and Florida are states with some of the lowest collective mileage, bringing down the national average. On the flip side, motorists in Wyoming, Georgia, and Oklahoma have some of the highest average annual mileage numbers in the US.
How can I calculate annual mileage?
Start with taking a look at the mileage currently on your car’s odometer. If you know how old your car is, divide that mileage by the age of the car. If you don’t know what year your car was manufactured, you can find this information on the driver’s door jamb of your car.
When you buy a Lemonade Car policy we’ll ask you how much you expect to drive your car over the next year.
It’s fine to estimate based on your past mileage if you don’t foresee any big changes with the way you use your car. But you might want to tweak your estimate if your habits will be different in the coming year—like if you’ll be commuting to work or school again, or taking more road trips or vacations.
What is annual mileage used for?
There are a whole host of reasons why knowing your annual mileage is important.
Your average annual mileage significantly impacts the value of a car. If you are selling your car, and it has low mileage, it can increase the car’s value. On the flip-side, high annual mileage can cause the value of the car to drop significantly. This is because buyers correlate the amount of miles with how many problems they will have with the car, how soon the car will need to be replaced and, of course, how valuable it is.
Many car insurance applications will ask you about the number of miles you expect to drive per year. They may ask this question in a general sense, or ask more specifically how many miles you’ll be commuting to work. The reason they ask this is because generally, the higher the mileage, the higher the risk that you may be involved in a car accident.
If your car is totaled in an accident, the insurance adjuster will document the total mileage, and the average miles driven per year. This will be taken into consideration by your car insurance company when they’re determining the value of the car and calculating any payout.
If you drive significantly less than the national and statewide averages, it may be worth considering a pay per mile program. With pay per mile car insurance you determine how much you spend each month based on how many miles you actually drive every month.
Should I worry about what my annual mileage is?
The short answer: No, with some exceptions.
It is important to know what your driving habits are, as well as the impact of your average annual mileage. Low mileage can help you save money on car insurance and, perhaps, you’ll be able to sell your car for a bit more money. High mileage may cause your car to depreciate faster and possibly require more repairs annually, and could result in slightly higher insurance rates.
If your car is leased, your agreement may stipulate a maximum number of miles allowed per a year. If you go over the mileage limit that you agreed to, your leasing company may charge you for every additional mile.
A few quick words, because we <3 our lawyers: This post is general in nature, and any statement in it doesn’t alter the terms, conditions, exclusions, or limitations of policies issued by Lemonade, which differ according to your state of residence. You’re encouraged to discuss your specific circumstances with your own professional advisors. The purpose of this post is merely to provide you with info and insights you can use to make such discussions more productive! Naturally, all comments by, or references to, third parties represent their own views, and Lemonade assumes no responsibility for them.represent their own views, and Lemonade assumes no responsibility for them. Coverage may not be available in all states.