Rising Gas Prices May Lower Car Insurance Rates

Higher Gas Prices Have Caused Changes. Gas prices started their rise in 2004, and there is no end in sight. Many people are trying to find ways to save money on gas, including hybrid cars. A recent New York Times article says people are beginning to cut down on gas spending by turning to public transportation instead of driving. They are also starting carpools and combining trips. All of these changes add up to fewer cars on the road and fewer miles traveled.

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People Are Driving Less. In fact, AAA projected that fewer people planned to drive this Memorial Day than last year, the first such decline in years. In addition, new driving data from the Federal Highway Administration (FHWA) suggests that people are starting to drive less and buy less gas.

If these trends continue, higher gas prices could result in less driving, and eventually lower car insurance rates. What exactly is the connection between lower mileage and better car insurance rates?

Injury Payment Totals Usually Decrease with Lower Mileage. As people drive less, they tend to get in fewer accidents, leading to fewer injuries and fewer injury payments. That's why many insurance companies give discounts for low mileage driving. If you drive fewer miles, your car insurance rates could go down.

Shop for Online Car Insurance Quotes. With sky-high gas prices and the economic downturn, can you afford to miss your best car insurance rate? Insurance.com offers free online car insurance quotes from top insurance companies, which allows you to compare multiple rates from different companies.