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Why is auto insurance ridiculously overpriced for those who drive few miles?
Some proportion of the costs of a policy have little to no relationship to miles driven.  Think of costs of underwriting, and more especially sales/marketing/client acquisition costs (auto insurance isn't in the same league as non-term life insurance (where the commissions and other selling expenses typically exceed the first year's worth of premiums), but the funny TV ads and/or agent commissions aren't free), as well as general business overhead. Also, as noted by quid, some proportion of claim risk isn't correlated to distance covered (think theft, flood, fire, etc.). There are also differences in the miles that are likely to be driven by a non-commercial/vehicle-for-hire driver who puts 25k miles a year vs. one who puts 7k per year.  The former is generally going to be doing more driving at higher speeds on less-congested freeways while the latter will be doing more of their driving on crowded urban roads.  The former pattern generally has a lower expected value of claims both due to having fewer cars per road-mile, fewer intersections and driveways, and also having any given collision be more likely to result in a fatality (paralysis or other lifetime disability claims are generally going to exceed what the insurer would pay out on a fatality).