Should you switch to pay-per-mile insurance?

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Pay-per-mile car insurance is a type of policy that adjusts your premium based on the actual number of miles you have driven in a given period of time. If you are retired, work remotely, live close to work or otherwise do not use your vehicle often, pay-per-mile insurance could help you lower the cost of auto coverage.

Bankrate’s insurance editorial team has researched the pay-per-mile programs offered by some of the best car insurance companies in the industry. Understanding what options you have when it comes to this unique type of coverage might help you decide if a pay-per-mile policy is right for you.

What is pay-per-mile insurance?

With pay-per-mile insurance, your car insurance rates are set by how many miles you drive. This can give you greater control over the cost of your coverage, helping people like high-risk drivers manage their car insurance budget.

Usually, pay-per-mile car insurance costs get broken into two categories:

  • Your base rate: This is the flat amount you’re going to pay (usually, each day or month). Insurers use the same factors to set this rate as they do with any other car insurance policy. That means things like your age, your driving history and your vehicle come into play.
  • Your pay-per-mile rate: On top of your base rate, you pay by the mile. The charge per mile is usually small, but it can add up quickly if you drive a lot in any given month. But if you don’t drive much, the cost of pay-as-you-go car insurance may rival even the cheapest traditional car insurance policies.

Generally, with pay-per-mile insurance, insurance companies equip your car with a device so they can track how much you are driving and bill you accordingly.

How is pay-per-mile different from telematics insurance?

While telematics and car insurance-by-the-mile both use a device in your vehicle to track your driving, they have different goals. With pay-per-mile coverage, your insurance provider is looking at how much you drive. With telematics, they look at how you drive.

Telematics insurance offers safe driving discounts to people who use best practices out on the road, including driving the speed limit and avoiding aggressive braking practices. If you are a safe driver and you are looking to find cheaper car insurance, a telematics program could help you save money.

Which providers offer pay-per-mile insurance policies?

Pay-per-mile car insurance is a relatively new concept, although it is gaining in popularity. It is possible that the pandemic contributed to this growth, as more people are staying home and driving fewer miles.

Below are some of the pay-per-mile options from a few popular auto insurance companies. All the base rate and per-mile rate examples, along with the estimated savings, come straight from the insurance providers.

Program and car insurance company How it works Availability Estimated savings
Metromile Metromile’s plug-in device is called the Pulse. You pay Metromile a base monthly rate (e.g., $29) plug a per-mile rate (e.g. $.06). If you drive 250 miles in a day, any miles beyond that are free. AZ, CA, IL, NJ, OR, PA, VA, WA 47%, on average
Mile Auto You send Mile a picture of your odometer once a month. Then, you pay your base rate (e.g., $48) plus your per-mile rate ($.08). AZ, GA, IL, OR 30-40%, on average
Milewise® from Allstate Milewise uses a plug-in device and the Allstate app. With this program, Allstate sets a base daily rate for you (e.g., $1.50), then adds that to your per-mile rate (e.g., $.06) to arrive at your coverage cost. AZ, DE, FL, ID, IL, IN, MA, MD, NJ, OH, OK, OR, PA, TX, VA, WA, WV, WI Not disclosed by the provider
SmartMiles® from Nationwide SmartMiles sets a monthly base rate (e.g., $35) plus a per-mile rate (e.g., $.07), which Nationwide tracks using a small device. Like Metromile, SmartMiles waives all miles over 250 in any given day. AR, AZ, CO, CT, DC, FL, GA, IA, ID, IL, IN, KS, KY, MD, ME, MI, MN, MO, MS, MT, ND, NE, NH, NM, NV, OH, OR, PA, RI, SC, SD, TN, TX, UT, VA, VT, WA, WI, WV, WY As an example, Nationwide says someone who might pay $133 a month with traditional coverage from them could pay $95 with SmartMiles.
Root Insurance Although technically not pay-per-mile insurance, Root works similarly. It uses your phone to track your driving, including miles and behavior and sets your premium accordingly. AZ, AR, CA, CO, CT, DE, GA, IL, IN, IA, KY, LA, MD, MS, MO, MT, NE, NV, NM, ND, OH, OK, OR, PA, SC, TN, TX, UT, VA, WI, WV Up to $900 a year

Who is pay-per-mile insurance best for?

As a general rule of thumb, you might want to consider car insurance by the mile if you drive less than average. Here are a few key groups that might save with pay-as-you-go car insurance.

People who work from home

If you are a remote worker, you are probably not covering nearly as many miles as the average commuter, which means you might save with insurance by the mile.

Just keep in mind that if you switch your coverage and then have to go back into the office, you could end up paying more with pay-per-mile insurance.

People who have another primary mode of transportation

Maybe you own a car, but you primarily use a bike or public transport to get around. You may be able to save by switching to pay-as-you-go car insurance if your car isn’t getting much use.

People who are college students

College students might benefit from pay-per-mile insurance. Many students go to college and leave their vehicles behind, which means that vehicle could be completely used. Some companies offer a distant student discount for this situation, but pay-per-mile coverage could be a good option too. Even if you have a vehicle at school, if you primarily walk your campus, pay-per-mile insurance might help your college budget go further.

People who have a second vehicle they rarely use

If you have more than one vehicle, you might find yourself driving one more often than the other. Your second vehicle might benefit from pay-per-mile insurance. Drivers with pleasure vehicles — cars that are only driven occasionally — might save money by signing the second vehicle up for a pay-per-mile program.

Frequently asked questions

Can I pay in full for a pay-per-mile policy?

Probably not. While each company will have its own guidelines, most are likely to require a monthly billing cycle with pay-per-mile policies. This helps to ensure that you are only paying for the miles you drive in that month. If you pay your policy in full, you may have to pay more or wait for a refund if you drive more or less than was expected.

How do car insurance companies track my mileage?

Most companies have an app or plug-in device that you must use to qualify for pay-per-mile insurance. This will calculate the number of miles you drive. Some companies may ask you to self-report your mileage by taking a photo of your odometer or filling out a form online. If you are asked to fill out a form, you will likely have to attest that the information is true. If you provide false information, your policy could be cancelled for fraud.

What is considered low mileage?

Most insurance companies view anything less than 5,000 to 7,500 per year as low mileage. Other carriers use a daily calculation, viewing drivers who drive less than 3 to 5 miles one way to work or school as low mileage drivers.

What happens if my driving habits change?

If you have signed up for pay-per-mile car insurance and your schedule changes, which causes you to drive more, you may want to consider switching back to a traditional policy. Talking to your insurance company and getting a quote for a regular policy could help you decide if pay-per-mile coverage is still saving you money.

Written by
Cate Deventer
Insurance Writer & Editor
Cate Deventer is a writer, editor and insurance professional with over a decade of experience in the insurance industry as a licensed insurance agent.
Edited by
Insurance Editor
Reviewed by
Assistant Vice President & Claims Field Manager