Drive less, save more: how low kilometres could cut your car insurance
25 Feb 2026
If your car spends most of its time parked rather than on the road, you could be paying too much for car insurance.
New analysis shows that drivers who travel fewer kilometres each year may be able to unlock meaningful savings through low-kilometre policies or pay-as-you-drive discounts.
Why low kilometres can mean lower premiums
Insurers generally see drivers who travel less as lower risk – simply because they have fewer chances to be involved in an accident. That’s why some providers offer dedicated low-kilometre policies.
According to Canstar research, there are at least 16 providers in the database marketing a specific low-kilometre discount or pay-as-you-drive option. This figure may be higher, as some insurers factor mileage into pricing without promoting it as a defined feature.
How much could you save?
Based on a sample of quotes from five brands across three separate insurance underwriters, the potential savings can be noticeable.
Average premiums by annual distance:
- 15,000 km: $1,501 average premium – baseline for comparison
- 10,000 km: $1,326 average premium – $175 cheaper (-12%)
- 5,000 km: $1,133 average premium – $368 cheaper (-25%)
In other words, drivers travelling around 5,000 km a year paid roughly a quarter less than those driving 15,000 km.
Research based on a sample of quotes of providers on Canstar’s database offering low kilometre or pay-as-you-drive discounts. Premiums based on the difference between quotes estimating 5k km, 10k km and 15k km driven annually. Quoting assumes a 2025 Automatic Hybrid Toyota Rav4 owned by a 45 year old male living in Sydney. Assumes the car is parked in the garage. Target excess of $1,000, with the closest option chosen when unavailable.
One catch to know
Low-kilometre policies rely on the distance you nominate (or purchase). If you exceed that allowance, an additional excess may apply – sometimes around $1,000 – so it’s important to estimate your driving realistically.
Who will suit low-km insurance?
This type of cover can be worth exploring if you:
- Work from home most of the time.
- Use public transport for commuting.
- Have a second household vehicle.
- Drive mainly for short local trips.
- Are retirees or occasional drivers.
Wallet Wins tip
If your driving habits have changed – for example, after moving closer to work or working remotely – it could be worth updating your annual kilometre estimate when you next compare policies. Even small changes to your mileage could translate into savings.
| Providers offering low-kilometre or pay-as-you- drive car insurance options |
|---|
| AAMI |
| ahm |
| Australian Seniors Insurance |
| CBA/ Bankwest |
| Bendigo Bank |
| Budget Direct |
| BUPA Insurance |
| Coles Insurance |
| Everyday Insurance |
| GIO |
| Huddle Insurance |
| Real Insurance |
| Shannons Insurance |
| Suncorp Insurance |
| TrueCover |
Source: Canstar. Based on car insurance policies on the Canstar database that market low-kilometre or pay-as-you-drive discounts. List may not be exhaustive.
This article was reviewed by our Group Manager, Corporate Affairs Belinda Williamson before it was updated, as part of our fact-checking process.
