Usage-Based Car Insurance: Pay-Per-Mile and UBI Programs (2026)
Usage-based car insurance ties your rate to how much and how safely you drive, rewarding low-mileage and safe drivers.
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Elizabeth RivelliFreelance Insurance Writer
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Katie PowersLicensed P&C Agent, Senior Insurance Editor
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Mark FriedlanderSenior Director, Media Relations, Insurance Information Institute
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Updated
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Traditional car insurance policies have a fixed rate, no matter how much or how little you drive. But if you use your car infrequently, usage-based car insurance (UBI) could be a cheaper option. Rather than charging a flat monthly fee, insurers base UBI premiums on the number of miles you drive or how safe you are behind the wheel.[1]
Here’s what you should know about usage-based car insurance so you can determine if this car insurance option is right for you.
Quick Facts
Drivers can save between 10% and 40% with UBI discounts.
Pay-per-mile rates are based on mileage, whereas behavior-based rates depend on driving habits.
Consider UBI if you have a short commute, work from home, or rely mostly on public transportation.
What is usage-based car insurance?
UBI is a type of insurance that’s priced based on your unique driving data. It relies on telematics technology to assess your mileage and driving habits. The insurance company then uses this data to determine your risk and set your premiums.[2]
The two types of UBI programs available are pay-per-mile policies, also called pay-as-you-drive, and behavior-based policies:
Pay-per-mile policies charge based on your monthly mileage. Typically, the insurer charges a flat monthly rate plus a small fee for each mile you drive.
Behavior-based policies charge based on your driving habits, like speed, braking, phone use, and time of day. When you drive safely, you can earn insurance discounts.
Pay-per-mile vs. telematics insurance
Pay-per-mile car insurance premiums are based on the number of miles you drive. But telematics car insurance rates are based on your overall driving behavior, including how you drive and when you drive.
Some behavior-based policies also track mileage.
Many national insurance companies offer pay-per-mile or telematics policies. Some offer both.
For example, Progressive Snapshot and State Farm Drive Safe & Save are both telematics programs. USAA also has a telematics program called USAA SafePilot and a separate pay-per-mile program called USAA SafePilot Miles.
When it comes to tracking, pay-as-you-drive and telematics insurance policies are similar. You’ll typically use a mobile app or plug-in vehicle to track your trips and distance. Some insurers might allow you to take a picture of your odometer instead.
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How pay-per-mile car insurance works
The premium you pay for a pay-per-mile car insurance policy includes a base rate plus a per-mile rate. This means the more you drive, the more you pay. Traditional rating factors, like your age, location, credit history, and driving record, can still affect your base rate.
Some pay-per-mile policies set a cap on their daily mileage charge. This cap can protect you if you unexpectedly go over your typical mileage for the day.
The two main ways to track mileage for a pay-as-you-go policy are a smartphone app and a small device that plugs into your car’s on-board diagnostics (OBD-II) port.
How much mileage qualifies as low mileage?
Insurers typically consider you a low-mileage driver if you drive less than 10,000 miles per year, but that’s not an industry-wide rule. In 2022, the average annual mileage among all U.S. drivers was 13,476, based on Federal Highway Administration (FHWA) data.[3]
Insurance companies differ in terms of how they define low mileage. Some insurers might consider 10,000 miles per year to be the cutoff, while others might have higher or lower thresholds.
Who saves the most with usage-based insurance?
The drivers who benefit the most from UBI are those who use their cars infrequently or consistently practice safe driving habits. Good candidates for UBI are people who work remotely, live in a walkable city, use public transportation, have short commutes to and from work, or are retired.
That said, UBI isn’t a good option for everyone. If you drive an average amount or more than average, UBI probably won’t help you save money. Instead, a traditional car insurance policy is likely the better pick.
You should probably avoid UBI if you have a long commute to work, take frequent road trips far from home, or constantly rely on your vehicle for daily errands and appointments.
Savings by usage-based insurance program
The amount you can save with usage-based auto insurance depends on the specific insurer and program. In the table below, you can see some of the most popular UBI programs, the potential savings, and where the program is available.
Program | Potential Savings | Availability |
|---|---|---|
| Allstate Drivewise | Varies by state | All states except California and Alaska |
| American Family KnowYourDrive | 15% for signing up; most customers save between 10% and 35% | Availability and discounts vary by state |
| Farmers Signal | Discount varies; customers who maintain a driving score of 80% or more are entered to win $100 in rewards each month | All states except Florida, Hawaii, New York, and South Carolina Signal is available in California but the discount isn’t |
| Liberty Mutual RightTrack | RightTrack Continuous: 15% participation discount if all drivers on your policy are enrolled, or 10% if only some drivers enroll; total savings of up to 30% for safe driving RightTrack 90-Day: Participation discount of up to 15% and up to 30% savings for completing the program | Availability and discounts vary by state |
| Nationwide SmartRide | 10% for signing up and up to 40% for safe driving | Open to all Nationwide policyholders; program criteria differ in California and North Carolina |
| Progressive Snapshot | Average savings of $164 upon enrollment and average savings of $328 at program completion | Not available in California; Snapshot is available in New York, but the participation discount isn’t |
| Root Insurance | Up to $1,200 per year | Not available in Alaska, Hawaii, Idaho, Maine, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Rhode Island, South Dakota, Vermont, or Wyoming |
| Travelers IntelliDrive | Up to 30% | Available in Alabama, Connecticut, D.C., Iowa, Maine, Maryland, Nevada, North Dakota, South Dakota, Virginia, Washington, or Wisconsin |
| State Farm Drive Safe & Save | 10% for enrolling and up to 30% for safe driving | Not available in California, Massachusetts, or Rhode Island; discount availability varies in North Carolina |
| USAA SafePilot | Up to 10% for signing up and up to 30% at renewal | All states except California; restrictions apply for drivers in Massachusetts |
Best usage-based insurance programs
Many national insurance companies offer UBI programs, but they’re not all created equal. Here’s a look at some of the best usage-based insurance programs.
Nationwide SmartRide
Pricing model: Discount only
Average savings: 10% for enrolling; up to 40% for safe driving
State Availability: All Nationwide policyholders
Nationwide SmartRide is a discount-only program that’s available to all Nationwide customers. You use the SmartRide plug-in device or SmartRide mobile app to track your trips for four to six months. At the end of the program, you can earn a discount of up to 40% for driving safely. Unlike some other UBI programs, Nationwide won’t raise your premium if you demonstrate risky driving behaviors.
GEICO DriveEasy
Pricing model: Discount, but rates can increase with risky driving
Average savings: 5%–15%
State availability: Available in all states except California, Hawaii, and Vermont
GEICO DriveEasy is an app-based UBI program. It automatically tracks driving behaviors like hard braking, acceleration, and phone use, and calculates a score. The higher your score, the bigger your discount will be. GEICO DriveEasy is available in 47 states and Washington, D.C. The program also has Accident Assist, which can help you call emergency services or get a tow truck if the app senses hard braking.
Liberty Mutual RightTrack 90-Day
Pricing model: Discount, but rates can increase with risky driving
Average savings: Up to 15% for enrolling; up to 30% for program completion
State availability: Not available in all states
The Liberty Mutual RightTrack 90-day program provides a discount of up to 15% for signing up and up to 30% for completing the program. On each trip, the Liberty Mutual mobile app monitors your driving habits, like braking and time of day, to determine how safely you’re driving. Depending on your location, a safe driving discount is applied at your next renewal or at the end of the 90 days. Some drivers could see a rate increase for unsafe driving, but it varies by state.
Allstate Drivewise
Pricing model: Discount, but rates can increase with risky driving
Average savings: Varies by state
State availability: All states except California and Alaska
Allstate Drivewise is a UBI program available to Allstate policyholders in most states. The Allstate mobile app tracks your driving behaviors, and once you’ve taken 50 trips, you can qualify for a policy credit. You can earn a credit every six months if you consistently drive safely. You can check the Drivewise dashboard in the mobile app to get feedback on your driving, complete safe-driving challenges, and more.
Farmers Signal
Pricing model: Discount, but rates can increase with risky driving
Average savings: Varies
State availability: All states except Florida, Hawaii, New York, and South Carolina. Discount not available in California
Farmers Signal is an app-based UBI program that monitors habits like phone use, hard braking, time of day, and mileage. Customers can earn an enrollment discount plus additional savings at policy renewal by driving safely. Signal participants who maintain a driving score of at least 80% are also entered to win $100 in retailer gift cards every month.
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Privacy and data tracking with UBI
UBI programs track a variety of criteria that help the insurance company get a better picture of your driving habits. Some of the most commonly tracked behaviors include your:
Mileage
Location
Acceleration
Hard braking
Cornering
Cell phone use
Time of day
Car insurance companies use this information to assess your driving habits and calculate your premium. Most insurers have strict privacy policies in place to protect your data.
For example, Allstate Drivewise says that driver location is never visible to anyone servicing a policy. The information used to determine driving habits is available only to the customer, their Allstate agent, or a customer service representative.
USAA states that it never shares SafePilot driving data with other companies. It uses the data only to calculate your potential discount or when you file an accident claim.
Before you enroll in a UBI or telematics insurance program, it’s a good idea to review the specific data terms so you know exactly how the company will use your information. If insurers plan to sell or share your data, you might be able to opt out and still participate.
Pros and cons of usage-based car insurance
UBI programs have advantages and drawbacks. Here are some things to consider before you enroll in UBI or telematics insurance.
Pros
Driving safely can lead to potential discounts of 40% or more, based on the insurer.
It could be a more affordable insurance option for infrequent drivers.
Certain programs provide other useful features, like crash detection.
Cons
Some insurers increase premiums if you don’t drive safely.
Participation requires sharing your data and location, which may raise privacy concerns.
Monthly premiums vary, which can make it difficult to budget for insurance costs.
Who shouldn’t use usage-based insurance?
Low-mileage car insurance isn’t right for everyone. It’s a tailored solution for drivers who don’t use their cars very often. Here are some examples of drivers who probably aren’t a good candidate for a UBI policy:
Workers with a long commute
People who often drive late at night
Rideshare drivers
Frequent roadtrippers
Drivers with a habit of using their phones in the car
Usage-based car insurance FAQs
Enrolling in your insurance company’s UBI program can potentially help you get more affordable coverage. Learn more about UBI car insurance, including who should consider it and how much you might save.
Is usage-based car insurance worth it?
Usage-based car insurance can be worth it for low-mileage drivers. Typically, pay-per-mile car insurance is less expensive than traditional auto insurance if you don’t drive very often.
Which company has the cheapest pay-per-mile car insurance?
Mile Auto has the cheapest by-the-mile insurance, based on Insurify quote data. It has an average premium of $138 per month for full coverage and $74 per month for liability-only coverage.
How much can you save with usage-based insurance?
You can often save up to 40% with usage-based insurance, but the actual discount depends on the insurance company and your other rating factors.
Is pay-per-mile insurance cheaper than traditional coverage?
For infrequent drivers, pay-per-mile insurance can be cheaper than traditional car insurance. It’s worth comparing rates for traditional insurance policies and pay-per-mile insurance options to see which one has lower premiums based on your situation.
Does usage-based insurance track your location?
Yes, insurance companies typically get access to your location when you enroll in a UBI program. But most insurers have privacy policies in place to protect your data.
How many miles can you drive with pay-per-mile insurance?
Pay-per-mile insurance doesn’t normally cap the number of miles you can drive. But in most cases, it’s cheaper than regular auto insurance only if you drive less than 10,000 miles per year.
Can usage-based insurance raise your rates?
Yes, some insurance companies will increase your premium if you demonstrate unsafe driving habits, like excessive speed or frequent hard braking. If you enroll in a UBI program, it’s important to prioritize safe driving to avoid rate hikes.
Sources
- NAIC. "Want Your Auto Insurer to Track Your Driving? Understanding Usage-Based Insurance."
- Insurance Information Institute. "Background on: Pay-as-you drive auto insurance (telematics)."
- Federal Highway Administration. "Average Annual Miles per Driver by Age Group."
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Elizabeth RivelliFreelance Insurance Writer
5+ years writing insurance and personal finance topics
Auto, home, health, and life insurance expertise
Featured in
Katie PowersLicensed P&C Agent, Senior Insurance Editor
Licensed auto and home insurance agent
4+ years experience in insurance and personal finance editing
NPN: 20564519
Featured in
Mark FriedlanderSenior Director, Media Relations, Insurance Information Institute
Media relations director for Insurance Information Institute
20+ years in insurance and communications
Impartial, independent expert