Car insurance costs continue to rise, but low-mileage drivers may be overpaying for coverage they don’t fully use. Pay-per-mile auto insurance offers a fairer pricing model by charging drivers based on actual mileage rather than a fixed rate.
What Is Pay-Per-Mile Auto Insurance?
Pay-per-mile auto insurance is a usage-based insurance (UBI) model where premiums depend on how much you drive. Unlike traditional policies with fixed rates, these plans combine:
- A monthly base fee (typically $20–$50)
- A per-mile cost (usually $0.05–$0.10 per mile)
How Mileage Is Tracked
Insurers use different methods to monitor driving distance, including:
- Telematics devices – Plug-in or built-in trackers that record mileage
- Mobile apps – GPS-enabled smartphone apps that log trips
- Odometer checks – Periodic photos or manual reporting
This data ensures accurate billing, so drivers only pay for the miles they actually use.
Why Choose Pay-Per-Mile Auto Insurance?
For the right driver, pay-per-mile insurance offers several advantages:
1. Lower Costs for Low-Mileage Drivers
If you drive under 10,000 miles per year, you could save 30–40% compared to traditional insurance.
2. Fairer Pricing Model
Instead of subsidizing high-mileage drivers, you pay based on actual usage.
3. Encourages Eco-Friendly Driving
Reducing unnecessary trips helps lower fuel consumption and emissions.
4. Flexible for Occasional Drivers
- Ideal for those who:
- Work from home
- Use public transit often
- Own a secondary vehicle
However, frequent commuters may find traditional insurance more cost-effective.
Top Pay-Per-Mile Auto Insurance Providers
Several insurers offer competitive pay-per-mile plans:
1. Metromile
Best for: Tech-savvy drivers who want precise mileage tracking
How it works: Uses a plug-in device to monitor miles and driving habits
Unique feature: Offers a Savings Calculator to estimate potential discounts
Best for: Allstate customers looking for flexible pricing
How it works: Tracks miles via a mobile app
Unique feature: No upfront device installation required
Best for: Drivers who want a hybrid model (base rate + per-mile charge)
How it works: Uses a telematics device for accurate mileage reporting
Unique feature: Includes accident forgiveness for eligible drivers
How Pay-Per-Mile Compares to Traditional Insurance
- Pricing:
- Pay-Per-Mile: A low base rate plus a per-mile charge. You pay for actual miles driven.
- Traditional: A fixed premium based on estimated annual mileage and risk factors.
- Cost Driver:
- Pay-Per-Mile: Total miles driven is the primary factor.
- Traditional: Driving history, age, vehicle type, and location are the main cost drivers.
- Best For:
- Pay-Per-Mile: Low-mileage drivers (e.g., remote workers, urbanites, retirees).
- Traditional: Frequent drivers and average commuters.
- Savings:
- Pay-Per-Mile: High potential savings for those who drive infrequently.
- Traditional: Savings come from standard discounts, not reduced driving.
- Mileage Tracking:
- Pay-Per-Mile: Requires a device, app, or odometer readings.
- Traditional: Relies on a self-reported annual estimate.
- Privacy:
- Pay-Per-Mile: Involves sharing some driving data.
- Traditional: No ongoing data collection required.
Who Should Consider Pay-Per-Mile Insurance?
This type of insurance is ideal for:
- Remote workers who rarely commute
- Retirees with reduced driving needs
- Urban residents using public transit frequently
- Students who leave their car at home
- Secondary vehicle owners
If you drive more than 12,000 miles annually, traditional insurance may be cheaper.
Final Thoughts
Pay-per-mile auto insurance is a smart, cost-saving option for drivers who don’t log many miles. By aligning premiums with actual usage, it provides fairer pricing and potential savings.
Before switching, compare quotes from Metromile, Milewise, and Nationwide SmartMiles to find the best fit. If you drive sparingly, this innovative model could be your ticket to lower insurance costs.
