Pay-Per-Mile Car Insurance: A Guide (Updated 2022)

Anna Baluch
Written by
Anna Baluch
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Written by
Anna Baluch
Insurance Writer
Anna Baluch is a Cleveland-based personal finance and insurance expert. With an MBA from Roosevelt University, she enjoys writing educational content that helps people make smart financial decisions. Her work can be seen across the internet on many publications, including Freedom Debt Relief, Credit Karma, RateGenius, and the Balance. Connect with Anna on LinkedIn.
Jackie Cohen
Edited by
Jackie Cohen
Photo of an Insurify author
Edited by
Jackie Cohen
Editorial Manager
Jackie Cohen is an editorial manager at Insurify specializing in property & casualty insurance educational content. She has years of experience analyzing insurance trends and helping consumers better understand their insurance coverage to make informed decisions about their finances.Jackie's work has been cited in USA Today, The Balance, and The Washington Times.

Updated August 15, 2022

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If you have a car but don’t drive very often, pay-per-mile car insurance might be worth exploring. It lets you pay for auto insurance coverage based on how many miles you drive. In most cases, it involves a daily or monthly base rate plus a per-mile fee. With pay-per-mile car insurance, you can potentially save hundreds of dollars on your car insurance costs.

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Quick Facts

  • Pay-per-mile car insurance allows you to pay for auto insurance by the mile.

  • If you’re a low-mileage driver, you might save hundreds of dollars per year on your car insurance policy.

  • While pay-per-mile auto insurance can be a cost-effective option, it’s only offered by select providers in several states.

What is pay-per-mile car insurance?

What is pay-per-mile car insurance?

Pay-per-mile car insurance allows drivers to pay for coverage by the mile. For people who don’t drive a lot, it can save them a lot of money on their car insurance costs without sacrificing coverage.

Pay-per-mile car insurance is a unique type of car insurance that looks at how far you drive to determine your premium. Therefore, it tends to appeal to drivers who don’t drive a lot. While pay-per-mile car insurance is a fairly new development in the auto insurance industry, there are a number of providers that offer it.

It’s important to note that this differs from usage-based programs, which track driving habits in order to offer discounts or rebates. Low-mileage drivers can save on their car insurance with a pay-per-mile policy.

See More: Compare Car Insurance

How Pay-Per-Mile Car Insurance Works

If you choose a pay-per-mile car insurance policy, you’ll pay a base rate, which will depend on factors like your age, gender, and vehicle make and model. You’ll also be charged a per-mile rate with a mileage cap. For example, if your cap is 150 miles and you drive 200 miles in one day, you’ll only have to pay for the first 150 miles of your trip.

To monitor how far you drive, car insurance companies will use a mobile app or another vehicle-tracking device. If you don’t feel comfortable sharing your mileage data, some providers will allow you to send them photos of your odometer on a regular basis. Since pay-per-mile car insurance is a fairly new concept, it’s only offered by several major car insurance companies, as well as some smaller ones that sell it exclusively.

See More: Cheap Car Insurance

Who should use pay-per-mile car insurance?

Since pay-per-mile car insurance uses a policyholder’s actual mileage to come up with their premium, it makes sense for a select group of people. If you’re retired or work from home, pay-per-mile car insurance can be a good fit. Also, if you live in an urban area with access to public transportation and only drive on occasion, it should definitely be on your radar.

In addition, if you’re a college student or stay-at-home parent or only drive short distances for personal reasons, pay-per-mile car insurance might save you money. You should avoid this type of insurance policy if you have a long commute to work, go on road trips frequently, or drive many miles for personal and/or professional reasons.

According to Mile Auto, you’re likely overpaying for auto insurance if you drive less than 10,000 miles annually. Nationwide states that its pay-per-mile insurance program is beneficial if you drive less than 8,000 miles per year, while Metromile says the same for those who drive less than 10,000 miles every year.

See More: Car Insurance Quotes

Pros of Pay-Per-Mile Car Insurance

As with any financial product, pay-per-mile car insurance comes with its own set of advantages. If you don’t put a lot of miles on your car, you can land a great deal on your auto policy. Also, compared to standard car insurance products, pay-per-mile auto insurance is more flexible.

Your premiums are less dependent on traditional factors, such as your age, credit score, and driving record. The number of miles you drive is most important. Depending on your policy and how often you drive, you may save hundreds of dollars every year.

Cons of Pay-Per-Mile Car Insurance

The greatest drawback of pay-per-mile insurance is that it’s only available from a select number of companies in a handful of states. Also, if you have an older vehicle, you may not qualify for a pay-per-mile program because you won’t have the technology necessary for the vehicle-tracking device.

In addition, if you drive more than 10,000 miles or believe your lifestyle will soon change and require you to drive more often, you’d probably be better off with a traditional auto insurance policy. Pay-per-mile is only cost-effective if you drive a few thousand miles per year.

Lastly, the claims process might be less efficient because most pay-per-mile companies are newer and still figuring out how to operate seamlessly.

Companies That Offer Pay-Per-Mile Insurance

Since pay-per-mile insurance recently entered the car insurance market, it’s not available through every car insurance company. You’ll have to do some research to figure out which providers offer it.

While some smaller companies, such as Metromile and Mile Auto, specialize in pay-per-mile insurance, a few large ones, like Allstate and Nationwide, sell it in addition to their standard insurance. Unfortunately, pay-per-mile may not be an insurance option in your state.

See More: Best Car Insurance Companies

Tips for Using Pay-Per-Mile Car Insurance

If you do move forward with pay-per-mile car insurance, you should keep your mileage as low as possible. To do so, take the most direct route (rather than the scenic route) every time you drive. Also, consolidate your trips to various places and figure out the route that will get you there in the fewest miles. Additionally, carpool or use public transportation whenever you can.

Lastly, if your job allows you to work from home at least part of the time, doing so can help you lower your mileage, even if you only avoid the commute for one or two days. With pay-per-mile insurance, every trip and mile that you’re able to avoid count toward your savings.

See More: Best and Worst Sites to Compare Car Insurance

Pay-Per-Mile Car Insurance May Be a Good Fit

Pay-per-mile car insurance may be right for you if you don’t drive much and are confident your mileage will continue to remain low in the future. In the event you do go this route, do your best to drive as little as possible. Otherwise, your policy may cost you more than you’d like and you’d be a better candidate for traditional car insurance.

Frequently Asked Questions

  • Pay-per-mile car insurance is worth it if you’re a low-mileage motorist and don’t think your driving habits will change anytime soon. If you drive often or believe you will in the future, a traditional policy is likely a better choice.

  • There are a number of ways pay-per-mile providers check your mileage via telematics. They might install a special device in your car’s diagnostic port or track your driving via an app on your smartphone. You may also be able to take a photo of your odometer and submit it to your car insurance company on a regular basis.

  • Not all pay-per-mile car insurance companies are created equal. The best option for you depends on where you live and your unique insurance needs. Even though Metromile and Mile Auto focus on pay-per-mile coverage, they’re limited in availability compared to Allstate Milewise and Nationwide SmartMiles. Also, if you want to bundle your car insurance with a homeowners insurance policy, for example, Allstate and Nationwide are likely good options.

  • If you’re unsure whether pay-per-mile car insurance is right for you, you may want to keep tabs on your miles before investing in a policy. With Metromile’s RideAlong app, you can get an idea of what your car insurance rates would be after it tracks your mileage for 17 days. Also, consider a mileage tracker app for your smartphone. This is a smart strategy if your driving habits are inconsistent.

  • You might be able to lock in discounts if you purchase a pay-per-mile auto insurance policy. It all depends on the insurance company and its particular offerings. Metromile and Nationwide SmartMiles, for example, offer discounts to those who can show a responsible driving history and safe driving behaviors.

    You might also secure a multi-vehicle discount if you insure multiple vehicles. Simply visit a provider’s website or reach out to them directly to learn more about any discounts available to you.

  • Metromile, which specializes in pay-per-mile car insurance policies, is only offered in eight states: Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia, and Washington. If you don’t live in one of these states, check Nationwide, Allstate, and Mile Auto to learn about their availability.

  • While pay-per-mile car insurance and usage-based insurance sometimes get used interchangeably, they’re not the same. A pay-per-mile plan relies on your mileage to calculate your premium with a base rate plus a per-mile rate.

    On the other hand, a usage-based car insurance policy monitors your mileage and driving behaviors, such as speeding and hard braking. The better your score, the lower your car insurance premiums will be.

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  • Data scientists at Insurify analyzed over 40 million auto insurance rates across the United States to compile the car insurance quotes, statistics, and data visualizations displayed on this page. The car insurance data includes coverage analysis and details on drivers' vehicles, driving records, and demographic information. With these insights, Insurify is able to offer drivers insight into how their car insurance premiums are priced by companies.

Anna Baluch
Written by
Anna Baluch
Linkedin

Insurance Writer

Anna Baluch is a Cleveland-based personal finance and insurance expert. With an MBA from Roosevelt University, she enjoys writing educational content that helps people make smart financial decisions. Her work can be seen across the internet on many publications, including Freedom Debt Relief, Credit Karma, RateGenius, and the Balance. Connect with Anna on LinkedIn.

Learn More
Jackie Cohen
Edited by
Jackie Cohen
Linkedin

Editorial Manager

Photo of an Insurify author
Edited by
Jackie Cohen
Editorial Manager
Jackie Cohen is an editorial manager at Insurify specializing in property & casualty insurance educational content. She has years of experience analyzing insurance trends and helping consumers better understand their insurance coverage to make informed decisions about their finances.Jackie's work has been cited in USA Today, The Balance, and The Washington Times.