It is true some companies offer discounts to motorists who drive a lower than average number of miles a year. The yearly or annual mileages at which your auto insurance is not discounted, and thus your rates go up, differ from one insurance company to another.

Auto insurance premiums in many instances are, in part, set by the information you provide about what purposes you drive for, how often you drive (i.e. to work or to school daily or if it is just a weekend car), and how far you drive per year. This is normally just one part of the rating factors that an insurance carrier will take into account.

Some states use or are contemplating mileage based insurance but not all states may include this as a rating factor or an insurance company may or may not use the mileage put on a vehicle as part of their rating calculations.

The fewer miles you drive in a year the less risk you are to get in an accident though so rates are typically lower if you drive fewer miles. There is not an insurance industry standard for when all insurance providers give you a discount for driving few miles or that they raise your rates once you drive more than a certain amount of miles per year. It varies from one insurance company to another as does how much this rating factor affects your overall rates.

For example GMAC with some of their policies use the OnStar system to track miles driven, and offers discounts to drives who log less than 15,000 miles per year. Other insurers have a limit for discounts at 14,000 miles annual driven.

Statistics shows that high annual mileage means greater chances of being involved in a car accident. There are many insurance companies that go as low as 12,000 miles per year as the average mileage to give discounts for. There is also the use of the car that most insurers look at as well. Cars driven for business and cars driven to and from work on a daily basis are more likely to get in crashes than those driven occasionally for pleasure, since those driving on a daily basis face heavier traffic conditions.

Some insurance companies are rolling out policies where you pay as you drive (PAYD) so the rates are dependent on miles. With these programs drivers who choose to take part in a special voluntary program experimenting with establishing premiums based on how much and under what conditions you drive, are known to get rate reductions of about 25 percent. The insurer can monitor the driving habits of the car owner by means of a tracking device mounted to the insured person's car. The device uses satellite and cellular phone technologies and shows the daily mileage as well as what time of day the car is driven most.

Analysis by the Consumer Federation of America (CFA) indicates that drivers could save an average of 5 to 10 percent on their auto insurance rates if they reduced their annual mileage. They found if you drive less than 10,000 miles annually, you could see a savings of about 5 percent on your premium. Less driving means less exposure to situations that could result in an accident. This results in fewer claims, and encourages insurers to lower rates.

So if your vehicle's yearly mileage is lower you may be able to lower your car insurance rates as well. Because insurance companies vary on the amount of annual miles driven per year they discount on you will need to ask your insurance company about their specific rating rules regarding this issue. Also when you are shopping around for insurance you can ask if they discount rates for 10,000, 12,000 or even up to 15,000 miles per year.

Asking about discounts for low annual mileage on your car may help you determine if you can reduce your auto insurance rates enough make it worth your time to use carpooling or mass transit to get to work, school or wherever you are going each week.