Pay-Per-Mile Car Insurance: What You Need to Know

If you drive infrequently, pay-per-mile car insurance could lower your premium.
Kayda Norman
By Kayda Norman 
Edited by Lisa Green Reviewed by Brenda J. Cude

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If you have a car but barely drive it, you might find yourself wondering if there’s a cheaper car insurance option beyond traditional coverage. Pay-per-mile insurance might save you money — up to 40% or more, according to some carriers — but only if you truly don’t drive regularly.

What is pay-per-mile insurance?

Pay-per-mile car insurance lets you pay for coverage based on how many miles you drive. Because of this, it’s best suited for people who generally don't drive often.

Pay-per-mile insurance is different from a low-mileage discount offered by some auto insurers. 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 far you drive.

Who should use pay-per-mile car insurance?

Pay-per-mile insurance is most likely to benefit people who drive very little, which may include those who:

  • Work from home.

  • Are in college.

  • Take mass transit, walk or use another mode of transportation.

  • Have a second vehicle they rarely use. Tip: Consider creating a separate pay-per-mile policy for only this car.

Americans drive around 13,500 miles a year, on average, according to the U.S. Department of Transportation's Federal Highway Administration. It’s difficult to know, though, how little you need to drive to benefit from pay-per-mile car insurance.

Mile Auto states on its website that if you drive fewer than 10,000 miles a year, you’re likely paying too much for traditional auto insurance. However, Nationwide says you’re most likely to benefit from its SmartMiles pay-per-mile insurance program if you drive less than 8,000 miles annually.

How pay-per-mile car insurance works

Pay-per-mile customers pay a monthly base rate, which stays the same, plus a monthly mileage rate, which can change. If the number of miles you drive changes from month to month, your monthly mileage rate will change as well.

To determine your monthly base rate, the carrier typically uses factors such as gender, age and car make and model, similar to a traditional car insurance quote.

Although pay-per-mile car insurance is different from a traditional auto insurance policy, you still get the same coverage options, such as comprehensive and collision insurance.

How your driving is tracked

Insurance companies use technology known as “telematics” to track how far you drive, using an app or other device. Telematics can also track risky habits — think hard braking or quick accelerating. Some pay-per-mile programs, like Nationwide SmartMiles and Metromile, use tracked driving behaviors to price rates or discounts. The safer you drive, the lower your premium may be. Note: Metromile was officially acquired by Lemonade in 2022, but still offers pay-per-mile insurance.

If you’re not comfortable with sharing your data, Mile Auto lets you buy pay-per-mile insurance without using a plug-in device that tracks your driving behavior. Instead, you’ll need to send the carrier a photo of your odometer once a month.

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Can you save with pay-per-mile insurance?

The cost of pay-per-mile insurance varies by insurer and how much you drive. And like a traditional auto insurance policy, your own driving history and personal characteristics are used to determine your monthly base rate.

Don’t automatically buy into the savings the company says you may find — in order to know how much you can save over your current carrier, you’ll need to do the math after you get a quote.

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).

For instance, 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, and 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 before trying a pay-per-mile plan. This will allow you to better estimate what your pay-per-mile insurance rate will be.

If you don't want to manually track your mileage, one option is Metromile’s Ride Along program. Metromile will track your driving for about two weeks through its app and give you an estimated bill based on your driving. You aren't obligated to switch to Metromile if you use the Ride Along feature.

Companies that offer pay-per-mile insurance

Only a handful of insurers offer a pay-per-mile insurance option. Some companies, like Metromile, specialize in this type of insurance, while a few large insurers, such as Allstate, also offer a per-mile option.

Below are the companies offering pay-per-mile insurance.

How it works: A plug-in device in your car and a mobile app track your driving.

Where available: AZ, D.C., DE, FL, ID, IL, IN, MA, MD, NJ, OH, OK, OR, PA, TX, VA, WA, WI, WV.

How it works: Specializes in pay-per-mile car insurance. A plug-in device in your car tracks your driving. Driving behavior is used to set rates in some states including AZ, IL, OR and VA, when you renew your policy.

Where available: AZ, CA, IL, NJ, OR, PA, VA, WA.

How it works: Specializes in pay-per-mile car insurance. You'll need to send a photo of your odometer once a month to track mileage.

Where available: AZ, CA, FL, GA, IL, OH, OR, PA, TN, TX, WI

How it works: A plug-in device in your car tracks your driving.

Where available: All states except Alaska, California, Delaware, Hawaii, Louisiana, Massachusetts, New Jersey, New York, North Carolina and Oklahoma.

Frequently asked questions

It depends on how often you drive. If you consistently log low mileage, pay-per-mile insurance may be cheaper than a traditional auto policy. But if you’re considering it only because you know you’ll be temporarily driving less, a traditional policy is still the best choice.

Carriers check your mileage in a few different ways. Your insurer may track your mileage through a device installed in your car’s diagnostic port, or an app on your phone. Other companies might ask you to take a photo of your odometer on a regular basis.

The best pay-per-mile company for you depends on where you live and your insurance needs. Although Metromile and Mile Auto specialize in pay-per-mile auto insurance, their programs aren’t as widely available as Allstate Milewise and Nationwide SmartMiles. Anyone looking to bundle their insurance will also want to consider Allstate or Nationwide.

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