Best Mile-Based Auto Insurance Companies: Pay-Per-Mile Plans

Pay-per-mile car insurance is a type of auto insurance that bases your premium on how many miles you drive. This type of insurance is best suited for people who don't drive very often, such as those who work remotely or take public transportation. The more miles you drive, the higher your premium will be.

Some of the top companies that offer pay-per-mile insurance options include USAA, Nationwide, and Allstate. Metromile is another company that specializes in pay-per-mile insurance and is available in eight states.

How does pay-per-mile insurance work?

Pay-per-mile car insurance is a type of usage-based insurance that allows customers to pay for coverage based on how much they drive. This makes it a good option for people who work from home, have a short commute, or drive infrequently.

Pay-per-mile insurance is different from a low-mileage discount offered by some insurance companies. Low-mileage discounts take a percentage off the total cost of a traditional insurance policy, whereas pay-per-mile insurance costs are calculated based on how far you drive.

There are two ways for insurance providers to track the miles of customers: a telematics device or a smartphone app. A physical telematics device is installed or plugged into the customer's vehicle, while the app can be downloaded straight onto their smartphone. Both options allow the insurer to collect specific information about the customer's driving habits, such as speed, braking, and mileage.

Pay-per-mile insurance customers pay a monthly base rate, which stays the same, plus a monthly mileage rate, which can change. The monthly base rate is determined by factors such as age, gender, credit history, type of vehicle, driver history, and length of prior insurance. The monthly mileage rate is calculated by multiplying the number of miles driven by the per-mile rate.

Some pay-per-mile insurance programs, like Nationwide SmartMiles and Metromile, use tracked driving behaviors to price rates or discounts. The safer a customer drives, the lower their premium may be.

While pay-per-mile insurance can be a good option for low-mileage drivers, it is important to note that it may not always result in lower costs compared to traditional insurance policies. Customers should gather quotes and do the math to determine if pay-per-mile insurance is the most cost-effective option for them.

Who should use pay-per-mile insurance?

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

• Take mass transit, walk or use another mode of transportation.
• Have a second vehicle they rarely use.
• Work from home or have a short commute to the office.

Americans drive around 13,500 miles a year on average, according to 2022 data from the US Department of Transportation's Federal Highway Administration. Mile Auto states that if you drive fewer than 10,000 miles a year, you're likely paying too much for traditional auto insurance. Meanwhile, 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.

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.

Pay-per-mile insurance customers pay a monthly base rate, which stays the same, plus a monthly mileage rate, which can change. The monthly base rate is determined by factors such as gender, age, and car make and model, similar to a traditional car insurance quote.

Some pay-per-mile insurance programs, like Nationwide SmartMiles and Metromile, use tracked driving behaviours to price rates or discounts. The safer you drive, the lower your premium may be.

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

How is your driving tracked?

If you opt for pay-per-mile car insurance, your driving will be tracked by your insurance company. This is done through telematics technology, which can be installed in two ways. The first is through a physical telematics device, also known as a dongle, which is installed or plugged into your vehicle. The second is through a smartphone app, which can be downloaded directly onto your phone.

The telematics technology will monitor your driving habits, including your speed, acceleration, braking, and other details each time you drive. This information is then reported to your insurance company, which will use it to adjust your premium or offer you a discount.

It's important to note that while telematics technology can collect a lot of data about your driving habits, it won't change the way your car operates or limit your speed or when and how you drive. Additionally, insurance companies routinely encrypt the data they collect, so you don't have to worry about your information being stolen or used against you.

Some insurance companies that offer pay-per-mile insurance and use telematics technology to track driving include:

• Allstate: Milewise
• Metromile
• Mile Auto
• Nationwide: SmartMiles

How much can you save with pay-per-mile insurance?

The amount you can save with pay-per-mile insurance depends on several factors, including your driving habits, location, and insurance company. On average, customers save up to $947 per year with pay-per-mile insurance, but the savings can vary from person to person.

Pay-per-mile insurance is a type of car insurance that charges you based on the number of miles you drive. It is designed for people who don't drive much, as it can be more cost-effective than traditional insurance for low-mileage drivers. The cost of pay-per-mile insurance is typically calculated using a base rate (either monthly or daily) and a per-mile rate. The base rate is usually determined by factors such as age, driving history, location, and marital status, similar to traditional insurance. The per-mile rate is generally between six and eight cents per mile.

To estimate your savings with pay-per-mile insurance, you can use the following formula:

> Monthly base rate + (Per-mile rate x Approximate number of miles driven per month)

For example, if your monthly base rate is $35 and your per-mile rate is $0.07, and you drive 400 miles per month, your monthly cost would be $63.

However, it's important to note that the savings may vary depending on your specific circumstances. The best way to determine your potential savings is to compare quotes from different insurance companies and calculate the estimated cost using the formula mentioned above. Additionally, pay-per-mile insurance may not be the best option for everyone. If you drive more than the average person, traditional insurance might be more cost-effective.

Some of the top companies that offer pay-per-mile insurance options include USAA, Nationwide, and Allstate. Metromile is another company that specializes in pay-per-mile insurance and offers competitive rates.

Which companies offer pay-per-mile insurance?

Several companies offer pay-per-mile insurance, which is an excellent option for people who don't drive much per month.

USAA, Nationwide, and Allstate are among the top three companies that offer pay-per-mile insurance options. Metromile is another company that offers pay-per-mile insurance and has been acquired by Lemonade. Mile Auto is also a company that specializes in pay-per-mile insurance products.

USAA

USAA's Pay As You Drive program tracks your mileage and driving behaviour, including braking, accelerating, and phone use while driving. The program offers liability insurance, collision coverage, comprehensive insurance, and uninsured motorist bodily injury coverage.

Nationwide

Nationwide's SmartMiles® program uses a base rate that you pay every month, plus a cost-per-mile variable rate. Customers can use a small telematics device or connect with an eligible car, and the program offers a safe driving behaviour discount of up to 10% after the first policy renewal.

Allstate

Allstate's Milewise® program offers traditional Allstate insurance coverage at a per-mile rate. The program has a pay-per-mile option, an unlimited vehicle option, and customers can combine features of both. The per-mile option charges a daily and per-mile rate on days you drive, while the unlimited option charges a flat daily rate regardless of miles driven.

Metromile

Metromile offers pay-per-mile insurance with a low monthly rate and a per-mile rate. They offer standard types of car insurance, as well as roadside assistance and rental car coverage. One unique perk is that any miles over 250 per day are free. Metromile also has an app that allows you to check your car's health, find your lost or stolen car, and avoid tickets with street sweeping alerts in select cities.

Mile Auto

Mile Auto offers pay-per-mile insurance products and requires drivers to submit a monthly odometer photo. They charge a low base rate and a per-mile rate, and their policies provide full coverage.

It's important to note that the availability of these programs may vary by state, so be sure to check with the companies directly to see if they offer pay-per-mile insurance in your area.

Frequently asked questions