It's in an insurance company's best interest to keep their rates competitive. One of the ways to stay competitive is to lower the rates of people who are lower risk drivers and raise the rates of higher risk drivers. If I have two people who have the same driving ability and the same probability to get into an accident per mile, the person who drives more often than the other is a higher risk driver, even though they are at the same skill level in terms of driving ability. If they charge the same amount for drivers with the same accident per mile ratio, even though one drives 10x as often as the other, they're going to lose market share when other companies start offering a per mile rate structure. So they will lose their low risk drivers to a company who understands that they are a much lower risk, simply based on how much they drive. It's that way in many insurance situations, not just with auto insurance. I am an actuarial student who works in the health insurance field, but the same actuarial concepts are applied to virtually every insurance mechanism, including auto.