Mileage & Car Insurance – Everything You Need to Know
In our article titled ‘How Customers Affect their Car Insurance Premium’, PitStopArabia discussed driving mileage. This was the very first point of the article and we discussed how much you intend to drive determines the premium. Today’s article will discuss mileage and car insurance in more detail. Many of us are unaware that you need to tell the insurance provider how much you intend to drive. But that is not the real issue. The common problem that conflicts us all is how are we supposed to calculate the mileage. Also, what happens if we drive more than the stated mileage or a lot less?
These are questions that need answering. Let's start.
How to Calculate Annual Mileage?
There are various ways to calculate your annual mileage. If it is a brand new car, just take a look at the odometer. It will give you an idea about your annual mileage. If it is an old one, many people note the odometer when the vehicle is handed over to them. This makes tracking easier. If you failed to note the odometer then, there is no cause for alarm.
Just have a look at the service records to get an idea. Also, your current personal situation needs to be factored in as well. Are you working from home and planning to do so for the foreseeable future? Are you currently working somewhere that requires a daily commute? These are all factors that increase or decrease your annual mileage.
For instance, a person working from home saves considerable mileage as compared to someone who needs to commute daily. Also, if you shift to a job that requires commute after working from home, make sure to tell the insurance provider. It is always a wise step to inform the insurance provider about any changes in writing or email. This helps you maintain a proper record that can prove useful.
What if you are a first-time car owner? What will you tell the insurance provider considering that you have not owned a car before this nor know how many miles you intend to drive? Again, insurance companies have the answer. They might install telematics products in your vehicle to get an idea about your mileage and driving style. This can help them set your insurance premium in a better way.
The UAE Insurance Authority is already working with concerned stakeholders regarding the adoption of telematics in vehicles to ensure safe driving among UAE residents. If you decide to opt against such devices, just track your weekly mileage. Use it to predict your annual mileage. PitStopArabia recommends adding extra miles for holiday trips and unplanned visits.
Why Mileage Matters?
Insurance companies in the UAE and around the world use different metrics to determine the insurance premium. One of these metrics is mileage. A person who drives more raises the likelihood of a claim. The reason is that a car that stays on the road longer is more prone to accidents than a car that is driven less. Therefore, if you tell the insurance provider that you intend to drive 15,000 km per year, the premium will be higher than someone who says 10,000 km per year.
What Happens if you Overstate or Understate the Mileage?
PitStopArabia will like to mention that the real purpose of this article was to answer this question. Naturally, a lot of you would be wondering and asking yourself the same question. Some of us might be even tempted to understate our annual mileage in the hopes of getting a lower premium. Before you do this, read the next paragraph.
Accidentally overstating the mileage is not an issue. But when you renew your policy, make sure to revise the mileage to get a reduced premium. The real issue is understatement whether intentional or unintentional. If you state the mileage lower intentionally, it gives the insurance companies the grounds for rejecting your claim. You might even have your policy blocked.
In many cases, the insurance company would just charge you higher instead of blocking the policy altogether. Nevertheless, it can happen and has happened to several people. This serves as a warning to people who might be looking to drive their mileage lower in the hopes of getting a lower premium.
Wrap Up
PitStopArabia always recommends being honest while filling out the details regarding mileage. One small mistake can prevent you from making a successful claim or have your policy blocked altogether. Therefore, it is wise to go through all records and other documents to make sure that all the information being provided is true. Purposely falsifying information is unethical and outright illegal.