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The magnitude of the mileage problem in personal auto

By Jimmy Engström  |  January 4, 2019

ADASPerception and reality often diverge when drivers estimate how many miles they drive in a year. Verisk’s 2018 Verified Mileage Study helps measure the difference: About two-thirds of drivers underreported their annual mileage to their insurers, and more than a quarter of the estimates studied were low by 6,000 miles or more. As a result, an insurer that uses mileage rating bands of 3,000 miles could be underpricing a significant portion of its book by two or more bands. Average underreporting was 3,177 miles a year.

The study looked at approximately 153,000 vehicle identification numbers (VINs) for which Verisk had access to two types of data: (1) verified mileage gathered through odometer readings and (2) vehicle owners’ self-reported mileage estimates obtained through ISO Statistical Plan filings.

Settling for uncertainty?

The findings highlight the unreliability of self-reported mileage, which creates a critical blind spot regarding important, highly predictive risk information for insurers. As a result, many insurers forgo mileage as a rating factor, or they group risks in overly broad, unrefined mileage bands. This in turn underscores the need for innovative tools to help insurers avoid the potential inadequacies of self-reporting and refine their bands by capturing and rating on more accurate mileage.

One size doesn’t fit all for insurers seeking to take on this challenge, so Verisk is building a growing array of solutions:

  • Consenting owners of connected cars in the Verisk Data Exchange can have mileage estimated with direct odometer data.
  • Odometer readings can be captured from sources such as state inspections, auto maintenance service providers, and dealers.
  • A predictive model can produce accurate estimates for new vehicles and those for which there’s not enough odometer data.

What’s ahead

In addition, to enable insurers to immediately take advantage of more precise mileage estimates, ISO has created new rating factors for mileage based on verified odometer readings, which we currently plan to start filing with state regulators in 2019.


Jimmy Engstrom is assistant director of product development at Verisk. You can contact him at Jimmy.Engstrom@verisk.com.