How Working From Home Affects Your Car Insurance Rates

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Written by Rayna Opoku Edited by Quiana Darden Reviewed by Amanda Clear

Updated January 4, 2023

Working from home has skyrocketed in popularity over the past couple of years. With many companies adopting a 100% remote or hybrid model, many highways had drastically less traffic for the first time in years. Drivers who dealt with rush hour commutes and long drives suddenly spent less time on the road. 

This shift in working culture didn’t stop there. Many office workers reported saving money on gas and having more time with their families instead of sitting in mind-numbing traffic. 

Of course, since you’re spending less time on the road, it’s only natural that you begin to think about your car insurance rates. If you’re someone who has a work-from-home or hybrid work schedule, it’s time to examine how this life change affects your car insurance rates. 

Key Takeaways:

• With the increase of companies offering work-from-home opportunities, drivers are spending considerably less time in their vehicles which can result in lower car insurance premiums.
• Major car insurance companies like Allstate, GEICO, Progressive and State Farm offer base rates or pay-per-mile policy discounts.
• If you’re a remote worker, contact your insurance company to notify them that you’re driving habits have changed. Ask them to review and update your rates based on your current circumstances.

How Does Remote Work Affect Your Car Insurance Rates?

Your annual mileage is one of the factors insurance companies use to determine your rates. For example, if you work an hour away from your home in an urban area, you’ll pay more in car insurance than your neighbor who works down the street in your rural town. 

In addition, insurance companies feel that drivers who spend more time on the road have a higher risk of accidents. If you’ve started to spend less time on the road, you could be eligible to pay less for car insurance.  

The average American drives around 12,000 miles per year. If your annual mileage dipped below this after working from home, it’s an excellent time to review your insurance rates and save some money. 

How to Save Money on Car Insurance Working from Home

If you’re currently working remotely, contact your auto insurer and let them know about your current driving situation. While some insurance companies offer discounts for low mileage driving, you can also consider other options. 

Pay-Per-Mile Insurance 

Many drivers who have a work-from-home situation are saving money by switching to pay-per-mile insurance. Pay-per-mile insurance is a type of insurance policy based on the number of miles you drive. 

Your insurance provider will calculate your monthly insurance premium based on these two factors:

• Base rate: Your base rate is calculated as a standard monthly insurance rate. Your auto insurer will consider factors like your age, zip code, and driving history to calculate this price. Your base rate will remain the same every month, no matter how many or how few miles you drive. 
• Your pay-per-mile rate: You’ll pay a per-mile rate after your base rate. This rate is generally only a few cents, but can add up quickly depending on how much you drive. 

Drivers who choose pay per mile insurance can use the following formula to calculate their monthly insurance premium: 

Monthly base rate + (Miles driven per month x pay per mile rate) = monthly premium 

Let’s look at Ryan as an example. He works from home full time and has a monthly base rate of $40 and a per-mile rate of $0.07. 

Last month, Ryan drove 330 miles running errands and visiting family and friends on the weekends. If we follow the formula above, we can calculate Ryan’s monthly premium: 

$40 + (330 x 0.07) = $40 + $23.1 = $63.10 

Ryan can expect to pay $63 for the driving he did last month. 

Note: If you’re a driver who likes to pay for their insurance premium in full up-front, this isn’t possible with pay-per-mile insurance. Your monthly rate is calculated based on your real-time mileage. If you paid up-front, you may overpay some months and underpay for others. 

Usage-Based Insurance 

Usage-based insurance is an insurance policy based on how safe your driving habits are. The safer your drive, the more you stand to save. 

To get started with a usage-based insurance program, you’ll first need a way to transmit data to your insurance company. Most insurance companies will install a tracking device in your vehicle or have you track your driving habits via a smartphone app. 

The tracking device will record your driving styles and the areas you drive. You’ll be penalized for bad driving habits, such as braking suddenly or speeding. While your base rate is calculated similarly to the pay-per-mile insurance, your per-mile rate is calculated based on your driving rates. 

After collecting data for some time, your insurer will decrease your rates or award you a discount based on your driving. 

Companies That Offer Low-Mileage Auto Insurance 

Now that you know there are serious savings at stake by switching to a form of low-mileage auto insurance, you need to know where to go to find it. 

Here are a few companies that offer drivers low-mileage auto insurance:

• Allstate 
• Farmers
• GEICO
• Nationwide
• Progressive
• State Farm
• USAA

How Can I Change My Auto Insurance Coverage as a Remote Worker?

Remote workers will be happy to know that you can change your car insurance coverage levels year-round. All you need to do is call your insurance agent, and they can make changes to your auto insurance that will go into effect immediately. It’s typically easy to get in contact with your insurance company, whether that’s online, by phone, using your mobile app or even meeting with a local insurance agent. 

But, before you decide to stick with the company you have, it’s always smart to compare car insurance rates and be sure you’re getting the best deal.

Should I Cancel My Car Insurance if I Work From Home?

Spending less time on the road has likely made you think about your car insurance needs. However, don’t rush to cancel your car insurance altogether. 

If you still drive at all you need to maintain at least the state minimum coverage for your area. Driving without a state minimum policy in place is illegal.

In some cases you can have comprehensive coverage only on your vehicle if you’re not going to drive it over an extended period. Comprehensive coverage doesn’t allow you to drive on the road, but will protect you if something happens to your car while it’s sitting. 

Canceling your car insurance could lead to a lapse in coverage, making it harder for you to get an affordable policy in the future because you’d be deemed a high-risk driver. 

If you have a car loan or lease, canceling your car insurance is entirely out of the question. To protect their investment, lenders will require a certain level of coverage, one that goes beyond the state minimum to include comprehensive and collision coverage. 

Additional Ways to Save on Car Insurance While Working From Home

Inquire About Discounts

Asking your insurer about potential car insurance discounts is one of the best ways to enjoy additional savings on auto insurance. You can inquire about any of the following discounts: 

• Multi-car discount: Insure more than one car on the same policy to enjoy savings. 
• Multi-policy discount: Bundle your homeowners or life insurance with your auto insurance policy to save money. 
• Affiliation discount: Enjoy auto insurance savings for college or university affiliation, such as a sorority or fraternity. There are also affiliation discounts or working for certain companies. 
• Good student discount: Do you have a 3.0 GPA or a B average? Your insurance company may award you a discount for being a good student. 
• Anti-theft discount: Qualify for savings by having or installing anti-theft features in your vehicle. 

Reduce Your Annual Mileage 

You can save money by reducing the number of miles you drive each year. Do this by asking to work from home full-time, instead of on a hybrid schedule, take direct routes, combine trips and errands, or carpool with coworkers when you do head into the office. 

Change Coverage Options 

If you’re driving a car you own outright without a loan or lease, consider changing your coverage options. Insurance companies usually offer many liability limit options higher than what is required by your state. Take some time to review your state’s requirement coverage and your financial status. If changing your coverage levels is possible, you can gain additional savings, but we wouldn’t recommend it. 

Increase Your Deductible 

Increasing your deductible is one way to maintain your coverage levels while saving money. For example, if you currently enjoy a $0 or $100 deductible, could you go up to $500 or even $1,000? Doing this could save you on your policy premium. 

However, make sure you can afford your new deductible out-of-pocket. If not, when you file a claim, you could end up in financial trouble since your insurance won’t kick in until you pay your deductible. 

Shop Around for Car Insurance 

It’s in your best interest to regularly shop around for car insurance. While some insurers reward long-time customers with discounts, it’s always to check and see the rates of other companies. 

If you find cheaper car insurance rates with another auto insurance provider, you can make the switch and save money. Use Compare.com to get quotes from multiple companies at once to see how insurance premiums stack up.

FAQs About Car Insurance While Working From Home 

What does working remotely involve?

Generally, working remotely includes three work models: telecommuting, remote work, and working from home. 

Can working from home get me cheaper car insurance?

Yes, it can. Your car insurance company will view you as a lower risk if you spend less time driving. In addition, because the amount of miles you drive each year is lower, you can save money on car insurance. 

How can I save money on car insurance as a remote worker?

Remote workers can save money on car insurance by switching to pay-per-mile or usage-based insurance. 

How can I adjust my car insurance coverage as a remote worker? 

You can adjust your car insurance policy by calling your auto insurance agent. They can answer any questions about switching to a new policy or lowering your coverage levels.

Rayna Opoku Auto Insurance Writer

Rayna Opoku is an expert content writer who has spent the last two years creating in-depth guides and articles for the auto insurance industry. With over four years of experience writing for various companies, she's able to make even the most complicated of concepts sound simple and straightforward. When she's not writing about car insurance, you can find her exploring the next Fintech trend, smashing birdies down the badminton court, or sipping a mocha at her favorite cafe.