Nerdy takeaways
- Pay-per-mile insurance is a form of usage-based insurance, which sets your rates based on driving habits like your speed, handling, when you drive and your mileage.
- Most large insurance companies offer usage-based insurance, but there are fewer strictly pay-per-mile options.
What is pay-per-mile car insurance?
Pay-per-mile insurance lets you pay for coverage based on how many miles you drive. Because of this, it’s best suited for people who don't drive often or only go short distances.
The cost of pay-per-mile car insurance depends on a monthly base rate that stays the same, plus your per-mile rate. Your base rate depends on factors such as your driving history, age and car. Your total premium changes every month with the number of miles you drive.
While pay-per-mile insurance works differently than a conventional auto insurance policy, both give you the same coverage options. You don’t need to worry about losing coverage that you need if you decide to switch to a per-mile policy, unless the insurer doesn’t offer that coverage at all.
Pay-per-mile insurance is different from a low-mileage discount, which some insurers offer. A low-mileage discount offers a percentage off the cost of a traditional policy, while pay-per-mile car insurance determines your rate based on how much you drive.
» MORE: How to save on car insurance
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Pay-per-mile vs. usage-based car insurance
Some companies offer “usage-based” car insurance, which monitors your driving behavior to calculate your car insurance costs. This is different from pay-per-mile insurance, which prices your premium based on how many miles you log. While the line between these two can feel blurry, this article will only highlight companies that offer true pay-per-mile car insurance.
How car insurers track your driving
Insurance companies use technology known as “telematics” to track driving behaviors, including how much you drive and when. Telematics can also track risky habits like hard braking or quick accelerating. Insurers typically collect this data with an app or device that plugs into your car.
Pay-per-mile programs, like those available from Nationwide and Lemonade, use the data they collect to determine your base rate or discount. The safer you drive, the lower your premium may be.
Who should use pay-per-mile car insurance?
Pay-per-mile insurance is best for people who don’t drive often, or drive very little. It may be worth considering if you work from home, have a vehicle that you rarely use or get around by taking mass transit and walking.
Even if you’re a low-mileage driver and you think you may benefit from pay-per-mile insurance, it’s worth considering a few other factors before signing up.
- You won’t have the same premiums every month. This could lead to unpredictable expenses if the amount you drive changes.
- You’ll have to share information about your driving. If you’re uncomfortable with your insurer monitoring your driving habits, you may want to opt for a regular policy.
- You have fewer options than other drivers. Only a few insurers offer pay-per-mile insurance. Those that do may not offer all of the types of coverage you need.
Can you save with pay-per-mile insurance?
The cost of pay-per-mile car insurance varies by insurer and how much you drive, but it’s tough to know how much driving is too much to benefit from this type of policy.
The Federal Highway Administration tracked miles traveled in 2022 and the average was 13,476 miles per driver. USAA, which offers a per-mile plan called SafePilot Miles, says that its program might be right if you drive 8,000 miles or fewer in a year.
If you’re someone that works from home, utilizes public transportation or only drives short distances, insurance companies suggest that per-mile insurance could be worth trying.
And like a traditional auto insurance policy, your own driving history and personal characteristics help determine monthly base rate. Even if you’re an infrequent driver, a high base rate may make a conventional plan the better choice if you want cheaper car insurance.
» MORE: Compare car insurance quotes
Is pay-per-mile insurance worth it?
Don’t automatically believe a company’s claims of how much you’ll save. In order to know how much you can save over your current insurer, you’ll need to gather quotes and do some math.
To estimate how much you’ll pay for pay-per-mile insurance, use the following formula:
Monthly base rate + (Per-mile rate x Approximate number of miles you drive per month).
Let’s say your pay-per-mile quote shows a monthly base rate of $34 and a per-mile rate of 5 cents. You generally drive 800 miles a month.
You can calculate your monthly rate as: $34 + (.05 x 800) = ($34 + $40) = $74.
Again, this is only an estimate. Your actual cost per month will vary depending on how many miles you drive.
🤓 Nerdy Tip
Not sure how many miles you drive? Keep track of your mileage across a few normal weeks before trying a pay-per-mile plan. This will allow you to better estimate what your pay-per-mile insurance rate will be. Companies that offer pay-per-mile insurance
Only a handful of insurers offer pay-per-mile insurance. Mile Auto specializes in this type of insurance, while a few large insurers — such as Lemonade and Nationwide — also offer a per-mile option.
Below are the companies offering pay-per-mile insurance.
Lemonade
Mile Auto
How it works: Mile Auto specializes in pay-per-mile car insurance. You'll need to send a photo of your odometer once a month to the insurer to track mileage.
Where available: AZ, CO, FL, GA, OH, OR, TN, TX.
Nationwide SmartMiles
How it works: Nationwide collects mileage data using a plug-in device in your car or your car’s smart technology to track your driving.
Where available: All states except Alaska, Hawaii, Louisiana, Michigan, New York, North Carolina and Oklahoma.
» MORE: Nationwide auto insurance review
USAA SafePilot Miles
How it works: SafePilot Miles tracks how much you drive and uses that data to set your premiums for the following month. When it’s time to renew your policy, you may receive a discount of up to 20% based on your driving habits, such as hard braking and phone usage.
Where available: Every state except CA, DE and NJ, with some limitations in MA.
» MORE: USAA auto insurance review
What is the best pay-per-mile car insurance company?
The best pay-per-mile company for you depends on where you live and your insurance needs. Although Lemonade and Mile Auto specialize in pay-per-mile auto insurance, their programs aren’t as widely available as Nationwide SmartMiles and USAA SafePilot Miles.
Also, anyone looking to combine their home and auto insurance will also want to consider Nationwide or USAA for the chance to earn a bundling discount.
We nerd out on car insurance
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- 1. Federal Highway Administration. Average Annual Miles per Driver by Age Group. Accessed Jul 22, 2025.
- 2. USAA. Drive less and save more with USAA SafePilot Miles™. Accessed Jun 26, 2026.
