Pay-Per-Mile Car Insurance

Pay-by-the-mile car insurance offers flexibility and savings for some drivers. Find out whether paying for car insurance based on your mileage suits your needs.

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What is pay-by-the-mile car insurance?

Pay-per-mile car insurance is straightforward: you pay for what you drive. Insurance companies' reason for offering it makes sense, too: the more you drive, the more often you’re on the road, and the more likely you are to get into an accident. Not every company offers by-the-mile auto insurance payment plans.

Let’s explore pay-per-mile car insurance and the companies offering it.

 

Pay-per-mile car insurance — table of contents:
  1. How does it work?
  2. Which insurance companies provide it?
  3. Pay-per-mile vs. telematics
  4. Does it save you money?

 


 

How does car insurance-by-mileage work?

Pay-per-mile car insurance policies use an in-car device to track the number of miles you drive per month in order to determine your rate. Your insurer charges a base rate plus a per-mile fee, which is used to calculate your premium. Your base rate consists of standard rating factors such as your driving history, age, gender and vehicle type.

While your annual mileage is a rating factor for determining your rate, it’s not a major contributor to your overall premium (unless you’re in California). Other non-driving factors such as your age and credit score have larger impacts on your rate than how much time you spend behind the wheel. While these non-driving factors are taken into account when pricing pay-by-the-mile auto insurance, they aren't weighed as heavily.

 


 

Which car insurance companies provide pay-per-mile coverage?

Although it seems simple, by-the-mile auto insurance is relatively uncommon. More insurance companies are beginning to provide insurance-by-mileage. Let’s take a look at how a few of these programs work.

 

Metromile

Metromile uses two things to determine your rate: your driving profile and your monthly mileage. Your monthly driving amount is calculated through “Metromile Pulse.” The company uses a wireless device that plugs into your vehicle’s OBD-II port to count the distance you drive. You can monitor your mileage through the Metromile app.

In addition to charging you based on the number of miles you drive, Metromile charges a monthly base fee. The base rate is determined by a driver's profile, so it’s hard to give an accurate estimate of Metromile rates. Because the number of miles you drive per month may vary, your bill may change by the month.

Although its pricing works differently than other providers, Metromile still provides the same coverages: liability, uninsured motorist, collision, comprehensive, and other common coverage options.

 

Esurance

Esurance’s pay-per-mile system works a little differently than Metromile’s. Esurance isn’t a strictly pay-per-mile car insurance company. But the company offers a usage-based driving program in addition to a standard insurance option. Esurance advertises a program for low-mileage drivers specifically, with low-mileage drivers defined as those traveling fewer than 10,000 miles per year. Esurance’s pay-per-mile coverage is available in select states and excludes electric vehicles and hybrids.

Esurance's pay-per-mile insurance program uses a plug-in device in the OBD-II port to record your mileage and determine your per-mile fee. Your base rate is assigned based on your age, gender, driving history, and vehicle-specific information. If your mileage fluctuates, your bill will vary.

 

Nationwide Smartmiles

Nationwide's pay-per-mile auto insurance offering is designed for low-mileage drivers who have little or no commute who are looking to save on their insurance costs. A Smartmiles auto insurance policy is comprised of a base rate and a variable rate that is determined by how much you drive. Some of the features Nationwide offers include a discount for safe driving, a handy mobile app that works as a mileage-tracking odometer, and a road trip exemption in which only the first 250 miles count during a single day. Expect the common coverage types, including liability, comprehensive, and collision coverages. This service is available in most states and compatible with most cars produced after 1996.

 

Allstate Milewise

Allstate's Milewise operates similarly to other pay per mile auto insurance policies, using a base rate with an additional charge for each mile driven. Utilizing a plug-in device, Allstate Milewise determines your base rate in a similar manner to telematics, using your driving habits to inform your rate. The associated app allows you to track your mileage and even set weekly goals. This program is currently available in the following states: Delaware, Florida, Idaho, Illinois, Indiana, Maryland, Massachusetts, New Jersey, New Mexico, Ohio, Oregon, Pennsylvania, Texas, Virginia, West Virginia, Washington.

 


 

How does pay-per-mile insurance differ from telematics insurance?

Pay-per-mile and telematics-driven insurance policies are similar but use different metrics to calculate your premium. Pay-per-mile insurance does not take into consideration your driving habits or behaviors, while telematics auto insurance relies upon driving behavior metrics to assign your premium. A telematics device will track abrupt braking, sharp turns, high speeds, and late-night driving to assess the risk you present to your insurance company. By using this granular data, telematics offers a holistic examination of your driving profile.

Here are some estimated discounts you can possibly expect from telematics:

 

CompanyEstimated Savings
Progressive SnapshotAverage of $130
Allstate DrivewiseAverage of 10-25%
State Farm Drive Safe & SaveUp to 15%
Esurance DriveSenseVaries
Nationwide SmartRideUp to 40%
Liberty Mutual RightTrackAverage of 5-30%
GEICO DriveEasyVaries

 

 


 

Is pay-per-mile car insurance worth it?

Pay-per-mile auto insurance is a solid money-saving option for those who drive only occasionally. Metromile advertises itself as a way to save you $500 per year, and Esurance promotes similar savings. If you’re a low-mileage driver who lives in an area with pay-by-the-mile insurance availability, it could be a solid option. Because Esurance offers both traditional and pay-per-mile insurance policies, you can easily access a side-by-side comparison of both rates to gauge which would be cheaper for you. Metromile offers pay-per-mile car insurance exclusively.

If you are simply looking for the best possible rate, shopping around is a good way to assess if pay-per-mile car insurance is worth it. The Zebra allows you to compare insurance products from a number of top insurance companies, giving you the chance to get multiple insurance quotes to see which plan is best for you. Take time to compare offerings such as full coverage and roadside assistance 

 

Compare car insurance rates today!

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Ava Lynch LinkedIn

Ava worked in the insurance industry as an agent for four-plus years. Currently providing insights and analysis as one of The Zebra’s resident property insurance experts, Ava has been featured in publications such as U.S. News & World Report, GasBuddy, and Yahoo! Finance.