Pay-Per-Mile Car Insurance Plans Explained & Reviewed

Since the pandemic, more people work from home and don’t want to pay for insurance on a car they rarely drive. So low-mileage drivers should consider pay-per-mile car insurance.

Pay-per-mile insurance offers the same coverages as traditional car insurance, but your mileage determines your rates. If you drive less than average, pay-per-mile programs may save you money.

In addition, many companies offer similar programs, but pay-per-mile car insurance costs vary.  Shop around to find the best pay-per-mile car insurance for you. Compare rates and coverages from multiple companies to find your best deal.

Keep reading to learn more about pay-per-mile car insurance and determine if it’s right for you.

What is pay-per-mile car insurance?

Pay-per-mile car insurance is just like it sounds, meaning much of your car insurance rates depend on how many miles you rack up.

According to the Federal Highway Administration, U.S. drivers racked up more than 3 million miles in 2019. Car insurance companies know that the more time you spend on the road, the more likely you will be in an accident. So, they offer other options to low-mileage drivers.

Pay-per-mile insurance is growing in popularity because it gives drivers an alternative to traditional car insurance. Although it isn’t for everyone, low-mileage drivers should consider switching.

Most pay-per-mile car insurance companies send you a device to plug into your car that records your mileage. However, keep in mind that privacy may be an issue since it records your location.

How much is pay-per-mile car insurance?

Pay-per-mile car insurance rates consists of two categories. While the base rate doesn’t change each month, the per-mile charge varies.

First, the car insurance company calculates your base rate. It determines rates using the typical factors that affect car insurance, including age, driving record, vehicle, credit score, and ZIP code.

Your base rate can be as low as $20 a month, but it may be higher depending on personal factors.

Once the insurer determines your base rate, it calculates your per-mile rate. Generally, the per-mile rate is low, and your monthly rate combines your base and per-mile rates.

For example, let’s say your base rate is $25 a month, and your per-mile rate is $0.05 a mile. So if you drive 300 miles in a month, that’s $15. When that’s added to your base rate, your monthly total is $40.

This table shows average rates based on coverage type from top car insurance companies for comparison.

Average Annual Auto Insurance Rates Based on Coverage Type

With traditional car insurance, your rates are at least $200 a month on average. So you’ll save about $160 a month with pay-per-mile car insurance.

There is also a daily cap on mileage. While the cap varies by company, it’s usually around 250 miles. That means your weekend road trip won’t cost you much more than usual.

However, every company charges different rates. So finding the best cheap car insurance company for people who don’t drive often takes some comparison shopping. (For more information, read our “Best Cheap Car Insurance Company for People Who Don’t Drive Often“).

Read more: Finding Cheap Business Car Insurance Rates

What companies offer pay-per-mile car insurance?

Pay-per-mile car insurance is relatively new, and not all car insurance companies offer it. It can also be challenging to find since not all states are on board with this type of car insurance.

Some companies specialize in pay-per-mile insurance. For example, Metromile only offers pay-per-mile coverage. Coverage is the same as a traditional policy, and you can even add roadside assistance and rental car coverage.

However, Metromile isn’t available in every state. You can only get Metromile coverage in Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia, and Washington.

Other companies offer traditional car insurance and pay-per-mile coverage. For example, Allstate offers pay-per-mile car insurance through the Milewise program, though there is limited availability.

Unfortunately, you can’t get pay-per-mile car insurance from State Farm, Progressive, or Geico. Each of these companies offers usage-based insurance instead of pay-per-mile coverage.

Usage-based insurance monitors driving habits and either lowers your rates or offers car insurance discounts based on how well you score. However, some car insurance companies raise your rates if you score poorly.

Pay-per-mile car insurance doesn’t typically monitor driving behaviors, just your mileage. As a result, drivers who are unsure about their safe driving skills may prefer pay-per-mile car insurance rather than usage-based coverage.

Who should consider pay-per-mile insurance?

If you’re trying to determine if pay-per-mile car insurance is right for you, think carefully about how you use your car.

Drivers may benefit from pay-per-mile insurance if they are:

• Working from home
• Stay at home parents
• Taking public transit to work
• College students
• Retired

Pay-per-mile car insurance isn’t a good fit for drivers who have long commutes or usually put a lot of miles on their vehicle each year.

Pay-Per-Mile Car Insurance: The Bottom Line

Low-mileage drivers may see significant savings with pay-per-mile car insurance. However, the concept is pretty new in the insurance world, so not all car insurance companies offer the program.

Pay-per-mile insurance is broken down into a fixed monthly rate and a variable per-mile rate. Your overall monthly rate is a combination of the two and largely depends on how far you drive each month.

Not every state allows drivers to purchase pay-per-mile insurance, and it’s not a good fit for drivers who spend a lot of time behind the wheel.

On the other hand, most large car insurance companies offer usage-based telematics programs. These programs monitor driving habits — like mileage — and offer a discount based on how well you score.

Each car insurance company offers different programs, coverages, and rates. So shop around to find the best fit for you with the lowest rates.