Pay-per-mile car insurance is a type of auto insurance that charges premiums based on the number of miles a customer drives instead of a set monthly amount based on certain demographics. Many large insurance providers offer this type of insurance. It can be a good way to save money if you don’t do a lot of driving, but it’s important to consider all your options.
What Is Pay-Per-Mile Car Insurance?
If you have pay-per-mile car insurance, your monthly or quarterly premiums will change depending on the number of miles you drive. Instead of charging a standard monthly rate based on your age, driving history, and location, pay-per-mile policies also factor in how many miles you drive.
Who Benefits From Pay-Per-Mile Car Insurance?
If you own a car but don’t drive it much, opting for pay-per-mile car insurance could save you money. In some cases, it might even save you up to 40% on your premiums. Other people who could benefit from this type of insurance include:
- College students
- People who work from home
- People who live in the city, use mass transit, walk to and from work, or take other public transportation
- Drivers with an extra vehicle that they rarely use
Pay-per-mile insurance is not for everyone. The cost varies depending on the insurer and how many miles you drive. Before making the decision to switch from a traditional policy to this type of insurance, you’ll want to compare rates between this type of policy and a standard insurance policy to make sure you’ll benefit from savings.
Consider how often you drive, how far you commute to work or school, and how many miles you drive each month to run errands or visit friends.
What Companies Offer the Best Pay-Per-Mile Car Insurance?
Allstate Milewise is perfect for someone who drives less than the average driver. It starts with a daily rate, and then you pay a per-mile rate for any miles you drive that day. It’s available in several states across the country. You can check to see if it’s available in your area on the Allstate website.
Metromile is an insurance company that only offers pay-per-mile car insurance. It uses your driving profile and your monthly mileage to calculate your rate. The company uses a wireless device that’s plugged into your vehicle to count the miles you drive, and you can monitor your mileage through the app. Metromile charges a monthly base fee that’s determined by your profile. Since the number of miles you drive can vary from month to month, your monthly bill may vary as well.
Nationwide SmartMiles also charges a base rate and then a variable rate determined by the number of miles you drive for the month. Nationwide’s program also offers a discount for safe driving, and it has a mobile app that makes it easy for you to track your mileage. This program also has a road-trip exception where only the first 250 miles count on a single day.
Mile Auto is currently offered in Arizona, Georgia, Oregon, and Illinois. It’s a relatively new company in the pay-per-mile market and claims it can save low-mileage drivers up to 40% compared to a standard policy.
Esurance also offers a usage-based driving program. It’s available in select states but excludes electric and hybrid vehicles. This program uses a plug-in device to track and record your mileage. Your monthly bill is a combination of a monthly base fee determined by your age, driving history, gender, and vehicle. The per-mile fee may change from month to month.
Liberty Mutual ByMile
Liberty Mutual’s ByMile program charges a base amount plus a small fee for each mile driven. It has a cap of 150 miles per day, which means there is no charge after 150 miles. This means that if you take a road trip, you won’t be charged for the entire trip if you go over the mile cap.
Root is another new company that provides pay-per-mile insurance. It is a good choice for drivers who have violations on their driving record. Your insurance rate is based on information that the Root device in your car gathers. It will log your miles, but in addition to this, it will also monitor your driving habits.
How is Pay-Per-Mile Car Insurance Different From Behavior-Based Car Insurance?
Pay-per-mile insurance and behavior-based insurance have some similarities, but there are some important differences. Pay-per-mile charges the insured based only on the number of miles they drive. Their driving habits are not factored into the equation. Both types of policies use either an app or a device that’s plugged into your vehicle to track your driving.
Behavior-based policies take other factors into consideration when calculating rates. Some of these include:
- Driving speed
- Phone usage
- Driving at night
- Driving on the weekends
- Braking smoothness
- Driving during bad weather
- Taking hard corners
If you practice safe driving habits, your premiums will be lower, but if the device finds that you have unsafe driving habits, it may increase your rates.
How Do I Determine the Best Pay-Per-Mile Car Insurance Company For Me?
The best company for you will depend on where you live and your insurance needs. Some companies only offer their program in certain states. If you live in a state where there are only one or two options, you’ll have to base your decision on a comparison of those two companies.
You also might want to consider the benefits of bundling insurance policies. Since smaller companies such as Metromile and Mile Auto only offer pay-per-mile insurance, you can’t bundle other policies to save. Anyone looking to bundle their policies for homeowners and car insurance will have to consider Nationwide or Allstate.
If you’re considering pay-per-mile car insurance, take a closer look at how often you drive and how far you need to go each month. If you find you don’t drive many miles, you just might be able to save a significant amount of money.
At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.