Mile Auto Insurance: How Does It Work?

Mile auto insurance is a type of pay-per-mile car insurance that bases your insurance bill on how many miles you drive. It is different from a low-mileage discount offered by some auto insurers, as it determines your rate based on how far you drive rather than offering a percentage off the cost of a traditional policy. Mile auto insurance is best suited for people who drive very little, such as those who take mass transit, walk, or have a second vehicle they rarely use. The cost of mile auto insurance varies by insurer and how much you drive, and your monthly base rate is determined by factors such as gender, age, and car make and model. Mile auto insurance offers a flexible and cost-effective option for those who drive infrequently, providing the same coverage options as traditional insurance but with a monthly rate that reflects the number of miles driven.

How does pay-per-mile insurance work?

Pay-per-mile insurance is a great option for those who don't drive much, as it allows you to pay for coverage based on how many miles you actually drive. This type of insurance is ideal for people who take public transportation, work from home, or have a short commute. It is also a good option for those with a second vehicle that is rarely used.

So, how does it work? Well, pay-per-mile insurance customers pay a monthly base rate, which is calculated using factors such as age, gender, vehicle type, and driving record. This base rate stays the same every month. In addition, customers pay a monthly mileage rate, which can change depending on how many miles are driven. The more miles driven, the higher the mileage rate.

To track your mileage, insurance companies typically use a small device that plugs into the diagnostic port in your car, usually located near the steering wheel. This device accurately measures the number of miles driven, so you only pay for the miles you use. Alternatively, some companies, like Mile Auto, allow you to take a photo of your odometer each month to report your mileage.

Pay-per-mile insurance provides the same coverage options as traditional insurance, including comprehensive, collision, and liability insurance. However, it is important to note that pay-per-mile insurance is not available in all states, and the rates can vary depending on the insurance company.

Who is pay-per-mile insurance suitable for?

Pay-per-mile insurance is best suited for people who drive very little. This may include those who:

• Take mass transit, walk or cycle to work
• Work from home and don't commute
• Have a second vehicle they rarely use
• Have a car lease with tight mileage restrictions
• Are college students who live on campus
• Are retirees who seldom drive

Pay-per-mile insurance is also a good option for drivers who want low-mileage discounts on their insurance but don't want to be monitored and penalised for their driving behaviours. This is because most pay-per-mile policies do not base premiums primarily on driving behaviour data. Instead, they focus on how many miles you drive.

Therefore, pay-per-mile insurance could be a good idea for low-mileage drivers who are young or have bad credit, a poor driving record, or a lapse of insurance coverage.

How does pay-per-mile insurance track your driving?

Pay-per-mile insurance is a great option for people who don't drive much. This type of insurance allows you to pay for coverage based on how many miles you drive. This is different from a low-mileage discount offered by some auto insurers, where you get a percentage off the cost of a traditional policy.

There are two main ways that insurance companies track your driving to determine your monthly mileage rate:

• Telematics devices: These are small devices that plug into your car's OBD-II port, which is usually located near the steering wheel. The device needs to be plugged in at all times to accurately measure and bill your miles. Some examples of companies that use this method are Metromile, Nationwide, and Allstate.
• Mobile apps: Some companies, like Mile Auto, allow you to take a photo of your odometer once a month to report your mileage. This option may be preferable for those who don't want to share their data or have their driving behaviour tracked.

It's important to note that insurance companies that use telematics devices may also track your driving behaviour, such as hard braking or quick acceleration. This data can be used to price rates or discounts, rewarding safer driving habits with lower premiums.

Overall, pay-per-mile insurance offers flexibility and savings for those who drive infrequently, allowing them to pay for car insurance based on their actual mileage.

How much does pay-per-mile insurance cost?

The cost of pay-per-mile insurance varies by insurer and how much you drive. Your driving history and personal characteristics, such as age, gender, and location, are also used to determine your monthly base rate.

Pay-per-mile insurance customers pay a monthly base rate, which stays the same, plus a monthly mileage rate, which can change. If your mileage changes from month to month, your monthly rate will also change.

On average, you can expect per-mile rates to be between six and eight cents. For example, if your pay-per-mile quote shows a monthly base rate of $34 and a per-mile rate of 5 cents, and you drive 800 miles in a month, your monthly rate would be $74.

Some companies, like Metromile, offer a low flat monthly rate of around $29, plus a per-mile rate of around 6 cents. Mile Auto, another company that specializes in pay-per-mile insurance, offers a base rate of around $48 and a per-mile rate of around 8 cents.

It's important to note that these rates may vary based on your location and other factors. Additionally, some companies may offer discounts for safe driving behaviors or have maximum mileage limits before additional charges apply.

When considering pay-per-mile insurance, it's essential to compare quotes from different companies and calculate your estimated costs based on your average monthly mileage to ensure you're getting the best deal.

Which companies offer pay-per-mile insurance?

Several companies offer pay-per-mile insurance, with varying availability depending on the state. Here is a list of companies that provide this type of insurance:

Metromile

Metromile uses a wireless device that plugs into your vehicle's OBD-II port to track your monthly driving mileage. They also charge a monthly base fee that is determined by a driver's profile, which includes factors such as age, gender, driving history, and vehicle type. Metromile is available in Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia, and Washington.

Esurance

Esurance offers a usage-based driving program in addition to standard insurance. Their pay-per-mile coverage is available for drivers travelling fewer than 10,000 miles per year and excludes electric vehicles and hybrids. Esurance uses a plug-in device in the OBD-II port to record mileage and determine the per-mile fee. The base rate is assigned based on age, gender, driving history, and vehicle information. Esurance is available in select states.

Nationwide SmartMiles

Nationwide's pay-per-mile insurance is designed for low-mileage drivers with little or no commute. Their policy includes a base rate and a variable rate based on mileage. Features include a safe driving discount, a mobile app for mileage tracking, and a road trip exemption where only the first 250 miles per day are counted. Nationwide SmartMiles is available in most states and is compatible with most cars produced after 1996. It is not available in Alaska, Hawaii, Louisiana, New York, North Carolina, and Oklahoma.

Allstate Milewise

Allstate's Milewise program operates similarly to other pay-per-mile policies, with a base rate and an additional charge per mile. They use a plug-in device and an associated app to track mileage and set weekly goals. Allstate Milewise is currently available in 16 states: Arizona, Delaware, Florida, Idaho, Illinois, Indiana, Maryland, Massachusetts, New Jersey, New Mexico, Ohio, Oregon, Pennsylvania, Texas, Virginia, West Virginia, and Washington.

Hugo Insurance

Hugo Insurance offers a unique service where customers can turn their insurance coverage on and off as needed through a smartphone app. They offer liability insurance for shorter periods, such as 3, 7, 14, or 30 days. Hugo Insurance is currently available in Arizona, Georgia, Illinois, and Oregon, with limited coverage options.

Mile Auto

Mile Auto is a newcomer to the pay-per-mile insurance market, claiming potential savings of 30-40% compared to standard rates. They offer standard liability and physical damage coverages, as well as additional options like rental vehicle reimbursement and roadside assistance. Mile Auto is available in Arizona, California, Florida, Georgia, Illinois, Ohio, Oregon, Pennsylvania, Tennessee, Texas, and Wisconsin.

Noblr Insurance

Noblr Insurance offers pay-per-mile insurance and also takes into account how and when you drive to determine rates. They are currently available in Arizona, Colorado, Louisiana, Maryland, New Mexico, Ohio, Pennsylvania, and Texas, with plans to expand to more states.

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