What Is Pay-Per-Mile Car Insurance?
Pay-per-mile insurance can give low-mileage drivers serious discounts, but not all insurance companies offer this type of coverage.
Excellent
Why you can trust Insurify: Comparing accurate insurance quotes should never put you at risk of spam. We earn an agent commission only if you buy a policy based on our quotes. Our editorial team follows a rigorous set of editorial standards and operates independently from our insurance partners. Learn more.
Pay-per-mile car insurance is an innovative type of car insurance that rewards policyholders who drive less with potentially lower rates. As the name indicates, insurance companies typically charge you by the mile on top of a base rate for pay-per-mile insurance.
This type of coverage presents a cost-effective option for remote workers, retirees, self-employed people, and infrequent drivers. You can purchase this coverage through Mile Auto, Nationwide’s SmartMiles program, and other companies.
What is pay-per-mile insurance?
Pay-per-mile insurance is directly tied to the number of miles you drive each month. Through telematics technology, auto insurers can track your mileage and driving behavior to offer up-to-date and accurate rates.1
This type of coverage is ideal for people who work from home, use public transportation, are retirees, or are self-employed. Pay-per-mile insurance companies typically have a daily mileage cap or a limit on the number of miles you pay for.
Premium variability is the main difference between traditional and pay-per-mile car insurance. Purchasing traditional auto insurance may allow you to better plan for how much you’ll pay for coverage each month and year. Rates for pay-per-mile coverage fluctuate based on driving activity, in contrast, but will ideally cost less for low-mileage drivers than traditional insurance.
How does pay-per-mile insurance work?
When you sign up for pay-per-mile insurance, your insurance company will use a telematics device to track your miles and driving data. Insurers will typically send a device for you to put in your vehicle that communicates with a mobile app. If you don’t want to share driving data through a device, some companies, like Mile Auto, send text and email reminders to prompt drivers to submit odometer readings.
The premium your insurer charges you will vary. Combined with your per-mile fee based on your driving habits, a monthly base rate based on various risk factors, such as location and age, forms the foundation of your rate.
Pay-per-mile insurance typically offers the standard coverage. But company size may affect your options. For example, pay-per-mile coverage from large insurers like Nationwide and Allstate offers access to all the company’s coverages. Smaller companies like Mile Auto only offer the state minimum, full coverage, and a couple of optional coverages. In general, here are the coverages you can expect from a pay-per-mile company:
Best pay-per-mile insurance companies
Not all car insurance companies offer pay-per-mile insurance. Comparing multiple insurance companies will help ensure you’re securing the best rate and coverage possible. Learn more about the best pay-per-mile insurance companies below.
One of the leading low-cost companies for pay-per-mile insurance, Mile Auto focuses exclusively on this coverage type. The company claims that drivers can save up to 30% or 40% on car insurance when compared to current rates for traditional insurance.
Instead of using a tracking device, Mile Auto has drivers send periodic photos of their odometer.
How mileage is tracked: Through odometer readings
Availability: AZ, FL, GA, OH, OR, TN, TX
Base rate: Depends on driver profile
Per mile fee: Depends on driver profile
Mobile app features: No mobile app
Nationwide’s SmartMiles program offers pay-per-mile coverage and a 10% safe driver discount after renewal. Under this program, policyholders have a daily mileage cap of 250 miles.
How mileage is tracked: In-vehicle tracking device or through connected car mileage tracking
Availability: Nationwide except AK, HI, LA, NC, NY, and OK
Base rate: Depends on driver profile
Per mile fee: Depends on driver profile
Mobile app features: Claims tracking, billing, insurance ID card
Allstate’s pay-per-mile program, Milewise, tracks your mileage and gives feedback on your driving habits. It charges a per-mile rate as well as a low daily rate; policyholders still pay the daily rate even if they don’t drive that day.
Milewise offers two options: a traditional pay-per-mile policy and Unlimited, which only pays the daily rate and not a per-mile rate.
How mileage is tracked: Mobile app and in-car device
Availability: AZ, DE, FL, ID, IL, IN, MD, MA, MI, MN, MO, NJ, OH, OK, OR, PA, RI, SC, TX, VA, WA, WV
Base rate: Depends on driver profile
Per mile fee: Depends on driver profile
Mobile app features: Claims tracking, billing, insurance ID card, driving behavior tracking
Drivers in the military community who want pay-per-mile insurance can check out Noblr. This is especially helpful if you or a family member is on deployment and leaving a car unused. Rates consist of a static base rate and a fluctuating variable rate that takes your driving behavior and mileage into account.
How mileage is tracked: Mobile app
Availability: MD
Base rate: Depends on driver profile
Per mile fee: Depends on driver profile
Mobile app features: Driving behavior tracking, discount rewards, claims and account management, insurance ID card
Alternative to pay-per-mile insurance: Hugo
When does pay-per-mile insurance make sense?
The primary benefit of pay-per-mile insurance is the potential for paying less for car insurance. The fewer miles you drive, the less you have to pay for car insurance coverage. People who drive a lot for work and other regular commutes don’t benefit from this insurance model.
Pay-per-mile insurance can make a lot of financial sense for certain groups of people, including:
Remote workers
Retirees
Students who live near campus
Low-mileage drivers
Pay-per-mile insurance FAQs
Before making the switch to pay-per-mile insurance, compare your options and find answers to common questions about this type of coverage below.
Is there a difference between telematics and pay-per-mile car insurance?
Auto insurers use telematics devices to help track your mileage and driving behavior, which qualifies as usage-based insurance. Telematics car insurance may be used to offer you discounts for safe driving, but pay-per-mile insurance regularly tracks your miles to assess rates. What gets tracked and how your miles or behavior determines your rates vary by insurer.
Is pay-per-mile insurance worth it?
Pay-per-mile car insurance can be a money-saving option for people who drive very little — such as remote workers, public transportation commuters, seniors, and teens. A low monthly base rate and per-mile charge could cost less than standard car insurance for low-mileage drivers.
What does Metromile charge per mile?
Lemonade bought Metromile in 2022, so the company is no longer writing policies. Lemonade offers pay-per-mile policies in Arizona, Washington, and Oregon.
Is Milewise a good idea?
Allstate offers a pay-per-mile insurance option called Milewise. This option works well for low-mileage drivers, such as employees who work from home, retirees, and people who take public transportation frequently. If you live in one of the 21 states with Milewise available, you can get a low daily rate and save money on insurance if you drive infrequently.
How do insurance companies track your mileage?
Insurance companies that offer pay-per-mile insurance typically require you to install a telematics device in your car that pairs with a mobile app. This sends mileage data to the company to help determine rates. Some other companies, like Mile Auto, may allow you to regularly take photos of the odometer instead of installing a device.
What if you drive less than 25 miles a day?
In general, pay-per-mile coverage is best suited for people who drive less than the federal average of 13,000 miles per year, or about 36 miles per day.2
Track your mileage for a month to see how much you actually drive if you’re considering a policy.
)
)
)
)
)
)
)