Learn more about our methodology and editorial guidelines.
What Is Pay-Per-Mile Insurance?
Pay-per-mile car insurance, sometimes known as pay-per-use, is a type of usage-based insurance that lets you pay for coverage based on how much you drive. Because of this, it can be a good option for people who work from home or have a short commute to the office.
Drivers who don’t accumulate a ton of miles on their car avoid placing extensive wear and tear on their vehicle and save money on gas. Pay-per-mile car insurance policies can be cheaper than your current policy and offer the same coverage as standard insurance.
How Does Pay-Per-Mile Car Insurance Work?
Pay-per-mile car insurance monitors your driving distance either through a mobile app or plug-in device. Premiums are determined based on your total driving distance, with low-distance drivers receiving lower car insurance rates.
There are two ways that your car insurance provider can track your miles: a telematics device or a smartphone app. A physical telematics device is installed or plugged into your vehicle, while the app can be downloaded straight onto your smartphone.
Regardless of which option you choose, your insurer will collect specific information about your driving habits. Auto insurance companies collect key metrics like speed, braking and mileage to determine a highly-personalized premium.
Keep in mind that each insurer has its own program rules and regulations for pay-per-use car insurance.
How Much Does Pay-Per-Mile Insurance Cost?
While pay-per-mile car insurance rates are based on a number of factors, policies typically cost about 6 to 8 cents per mile. As the name implies, pay-per-mile insurance premiums are largely determined by the total number of miles that you drive each policy period.
So how does this work? Every pay-per-mile insurance program charges a base rate (either monthly or daily) and a per-mile rate. Ultimately, your specific pay-per-mile insurance premium is based on some of the standard auto insurance cost factors, such as age, driving history, location and marital status.
How To Estimate Your Costs
Fortunately, you can get a rough estimate of how much you may pay for a pay-per-mile car insurance policy.
First, you’ll want to get an average of how many miles you drive per month. You can get a quick average by resetting your vehicle’s trip meter to zero at the beginning of an average week of driving.
After seven days, take a look at your trip meter’s reading and multiply that number by four to get a rough estimate of your monthly average.
Next, you just need to multiply your average by the per-mile rate offered from an insurance company. Add that figure to your base rate to get a rough estimate of how much a pay-per-mile policy will cost.
Say you drive 400 miles a month and your company offers you a base rate of $35 with a per-mile rate of 7 cents. Your formula might look something like this: $35 +(.07 x 400). With this calculation, your monthly rate would be $63.
Remember, this is just an estimate of your actual rate. You may pay more or less depending on which insurance company you use and how often you drive.
Is Pay-Per-Mile Insurance Worth It?
Pay-per-mile insurance can be a good idea for those who don’t drive often. If you usually drive fewer than 10,000 miles per year, a pay-per-mile insurance policy might be your best choice for affordable coverage. If you use your vehicle for a daily commute, this type of car insurance policy is probably not going to save you much money.
Drivers that tend to receive high rates for factors such as age and driving history may find a good deal on pay-per-mile coverage. Mileage-based programs often place less weight on these factors. One pay-per-mile insurer, Metromile, has a trial period that can give you an idea of what your insurance rates could be.
Pay-Per-Mile Car Insurance Companies
Below, we list several companies that offer pay-per-mile insurance. In each case, programs are not available in all states.
#1 USAA: Pay As You Drive
USAA’s Pay As You Drive program tracks how many miles you drive and tailors your rates toward low mileage. The program also tracks your driving behavior, which includes your braking, accelerating and phone use while behind the wheel. If you keep your mileage low and your driving safe under the program, you could end up saving a lot.
Coverage through the Pay As You Drive program varies by location and other factors, but all states have access to liability insurance, collision coverage, comprehensive insurance, and uninsured motorist bodily injury coverage.
Available states for Pay As You Drive include:
- Arizona
- Colorado
- Georgia
- Illinois
- Indiana
- Louisiana
- Maryland
- Missouri
- Nevada
- New Mexico
- Ohio
- Pennsylvania
- Texas
- Virginia
- Wisconsin
Read more: USAA insurance review
#2 Nationwide: SmartMiles
Nationwide’s SmartMiles® program uses a base rate that you’ll pay every month, plus a cost-per-mile variable rate that adds a few cents to every mile you drive in a month. This means that your monthly rate could vary based on how much you drive.
SmartMiles allows customers to use a small telematics device or connect with an eligible car and offers a safe driving behavior discount of up to 10% after the first policy renewal.
SmartMiles is available in Washington D.C. and all states but the following:
- Alaska
- Hawaii
- Louisiana
- North Carolina
- New York
- Oklahoma
Read more: Nationwide insurance review
#3 Allstate: Milewise
Allstate customers can get traditional Allstate insurance coverage at a per-mile rate through the company’s Milewise program. Milewise has a pay-per-mile option, an unlimited vehicle option and customers can combine features of both. Milewise is an ideal option for stay-at-home workers, commuters and retirees.
The per-mile option charges a daily rate and a per-mile rate to calculate the total cost on days you drive. An example daily rate is $1.50 while an example per-mile rate is 6 cents. The unlimited option charges a flat daily rate, regardless of miles driven.
With the Allstate app, you can:
- Review your past trips
- Access your Milewise policy details
- Look at detailed maps and get personalized driving feedback
- See your safe driving trends based on speed, braking and time of day
- View vehicle diagnostics and schedule repairs
Milewise is available in the following states:
- Arizona
- Delaware
- Florida
- Idaho
- Illinois
- Indiana
- Maryland
- Massachusetts
- Minnesota
- Missouri
- New Jersey
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- South Carolina
- Texas
- Virginia
- Washington
- West Virginia
- Wisconsin
Read more: Allstate insurance review
#4 Metromile
Metromile is a company that exclusively offers pay-per-mile car insurance. Customers pay a low flat monthly rate in addition to a reasonable per-mile rate. The company lists an example monthly rate of $29 with an example per-mile rate of 6 cents, though actual rates may vary by location and other factors.
Metromile offers the standard types of car insurance with its policies, in addition to roadside assistance and rental car coverage. One unique perk that sets Metromile apart is that any miles over 250 per day are free. Metromile also includes many benefits through its app, which allows you to check your car’s health, find your lost or stolen car, and avoid tickets with street sweeping alerts (in certain cities).
While Metromile has many perks, coverage is only available in the following eight states:
- Arizona
- California
- Illinois
- New Jersey
- Oregon
- Pennsylvania
- Virginia
- Washington
Read more: Metromile insurance review
#5 Mile Auto
Like Metromile, Mile Auto specializes in pay-per-mile insurance products. The company’s policies require drivers to submit a monthly odometer photo. Next, Mile Auto charges customers a low base rate and a per-mile rate.
Mile Auto lists an example base rate of around $48 and a per-mile rate of around 8 cents. Of course, actual rates may vary by location and driver profile. Policies through Mile Auto are full coverage.
Mile Auto is available in the states below:
- Arizona
- California
- Georgia
- Illinois
- Ohio
- Oregon
- Pennsylvania
- Tennessee
- Texas
- Wisconsin
Other Types of Insurance Coverage
The following standard types of insurance are typically available through most providers unless otherwise noted:
- Liability car insurance
- Collision insurance
- Comprehensive insurance
- Medical payments (MedPay)
- Personal injury protection (PIP)
- Uninsured/underinsured motorist coverage
Alternatives to Pay-Per-Mile Car Insurance
While pay-per-mile insurance can be a good option for low-mileage drivers, there are other low-mileage auto insurance options that, in some cases, can be a better fit.
Most mileage-based programs only track the miles you drive. Some providers, like Metromile, will also track information related to your vehicle’s health, such as fuel economy. Safe driving telematics programs, on the other hand, track a wide variety of factors that include distracted driving and hard braking.
Usage-Based Insurance
Usage-based insurance is similar to pay-per-mile insurance in that it monitors your driving behavior through a mobile app or plug-in telematics device. This type of insurance offers reduced rates based on how you drive, including the total distance you’ve driven. Usage-based insurance also measures driving factors such as cornering, braking and time of day that you consistently drive.
You can get usage-based coverage from a wider variety of providers than pay-per-mile insurance. Rates are not directly set by your distance driven, and these programs typically have a maximum possible car insurance discount.
Low-Mileage Discounts
While they may seem similar, pay-per-mile auto insurance is different from a low-mileage discount offered by some insurance companies. Low-mileage discounts take a percentage off the total cost of your car insurance premium, while pay-per-mile auto insurance costs are calculated based on how far you drive.
Traditional Policies
Even if you’re considering pay-per-mile insurance, we recommend comparing quotes from companies that offer traditional insurance policies so you can be sure you’re getting the best deal. In some cases, you may pay lower monthly rates with a traditional policy.
Reach out for free car insurance quotes from the top providers in the industry. After extensive research, we recommend starting your comparisons with USAA and Erie Insurance.
Pay-Per-Mile Car Insurance: The Bottom Line
Low-mileage car insurance is worth considering if you don’t put a lot of miles on your odometer each year. Several companies, such as Nationwide and Allstate, offer pay-as-you-go car insurance coverage. It’s worth reaching out to these and other car insurance companies for a free quote.
Pay-Per-Mile Car Insurance: FAQ
Here are a few frequently asked questions about pay-per-mile car insurance.
