Top Pay-Per-Mile Auto Insurance Coverage: What You Need to Know

Drivers who don’t drive often and want to save on car insurance could save on their rates by switching to pay-per-mile or pay-as-you-go car insurance. These policies charge a base rate on top of a per-mile fee to calculate rates, with your base rate considering factors like driving history, age, gender, and vehicle type. So, you’re paying for coverage based on how frequently you drive. 

Remote workers, college students, or people who use public transportation could benefit from a pay-per-mile car insurance policy. However, you should opt for standard insurance coverage if you travel a lot or use your vehicle for work.

This article will explain how pay-per-mile auto insurance works, where to find the best car insurance companies if you don’t drive often, and who might benefit from it. You should compare quotes from as many pay-per-use car insurance companies as possible to get the best coverage and lowest rates.

What is pay-per-mile auto insurance?

Pay-per-mile car insurance is a type of coverage that allows you to pay for your insurance based on how frequently you drive. Consequently, drivers who don’t drive often could benefit from car insurance by the mile.

Some insurance companies also offer a low-mileage discount for policyholders who only drive a certain amount annually, which differs from a pay-per-mile policy. With a low mileage discount, you receive a percentage off standard insurance coverage, whereas pay-per-mile insurance charges you a base rate and a per-mile rate.

However, while pay-per-mile insurance considers your mileage when setting rates, personal factors still impact your rates. So, get a quote from various pay-per-mile insurance companies to ensure you get the best deal.

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How does pay-per-mile auto insurance work?

Using a device you plug into your vehicle, pay-per-mile policies monitor your mileage and set rates based on how much you drive.

Pay-per-mile insurance companies charge policyholders a base rate and a per-mile rate, with the base rate considering factors like your driving history, age, gender, and vehicle type. So, if you drive infrequently, you’ll see lower monthly rates with pay-per-mile insurance.

On a standard insurance policy, the company may use annual mileage as a rating factor when crafting your rates, but it doesn’t significantly impact your overall cost. Often, age and credit score affect your premiums more than how frequently you drive with a standard policy.

Though your pay-per-mile auto insurance might consider these factors, they aren’t as impactful as your mileage.

Who would benefit the most from a pay-per-mile auto insurance policy?

Drivers who don’t hit the road very often benefit the most from a pay-per-mile policy. Some people who should consider low miles car insurance include the following:

According to the U.S. Department of Transportation’s Federal Highway Administration, Americans drive an average of 13,500 miles annually. However, knowing what your annual mileage should be to benefit from a pay-per-mile insurance policy can be difficult.

Mile Auto, a pay-per-mile insurance company, says you’re likely overpaying with traditional auto insurance if you drive less than 10,000 miles a year. On the other hand, Nationwide believes that number is 8,000 miles. (For more information, read our “Mile Auto Insurance Review“).

What auto insurance companies sell pay-per-mile policies?

With pay-per-mile insurance on the rise, more insurance companies have begun to provide car insurance rates by the mile. Some provide customers with various coverage types, while others have limited offerings.

Below is a list of insurance companies that promise savings if policyholders infrequently drive their vehicles.

Metromile Auto Insurance

When setting pay-per-mile rates, Metromile auto insurance considers your driving profile and monthly mileage. The company uses Metromile Pulse, a wireless device that plugs into your vehicle’s OBD-II port, to calculate how many miles you drive per month. The Metromile app allows you to view your mileage.

Alongside the per-mile fee, Metromile also charges policyholders a fixed base rate based on each driver’s profile, making it difficult to estimate how much you might pay for coverage. In addition, since your mileage will change month to month, your rates may vary.

Though Metromile isn’t a standard insurance company, it still offers the same coverages that most companies do, including liability, collision, comprehensive, uninsured/underinsured motorist, and more.

Allstate Milewise

Like most pay-per-mile companies, the Allstate Milewise service uses a base rate alongside a per-mile fee to determine how much you’ll pay for coverage. The program pulls data, such as driving habits, from a plug-in device to set your rates, and you can use Allstate’s Milewise app to track mileage and set weekly goals.

Unfortunately, the Allstate Milewise program is only available in the following states: Delaware, Florida, Idaho, Illinois, Indiana, Maryland, Massachusetts, New Jersey, New Mexico, Ohio, Oregon, Pennsylvania, Texas, Virginia, West Virginia, and Washington.

Mile Auto

Mile Auto says it can save customers between 30% and 40% on car insurance relative to typical auto coverage. The company offers the standard coverages you need to drive legally, like liability. You could also purchase other add-on coverages like rental vehicle reimbursement or roadside assistance. 

However, you can only get coverage in Arizona, Georgia, Illinois, and Oregon.

Esurance

Esurance offers both standard insurance options and pay-per-mile auto coverage, advertising a low-mileage program for those who travel less than 10,000 miles annually. Unfortunately, coverage with Esurance isn’t available to electric or hybrid vehicles, and you can only find it in certain states.

Like Metromile, Esurance utilizes a device that plugs into your OBD-II port to record mileage — if your mileage varies, so will your rates. Alongside a per-mile rate, you pay a base rate, which considers your age, gender, driving history, and vehicle information.

Nationwide SmartMiles

If you’re an infrequent driver without a regular commute, you could consider Nationwide SmartMiles to save on your auto insurance rates.

Nationwide’s SmartMiles program gives policyholders a base rate and variable rate that considers their mileage. With Nationwide, customers enjoy safe driving discounts and a handy mobile app that tracks mileage. The SmartMiles program also only counts the first 250 miles within a single day, so there’s no need to worry if you plan to take a long road trip.

Nationwide SmartMiles offers the same standard coverage options as any other company, like liability, comprehensive, and collision. However, not all states participate in the program, and many vehicles aren’t eligible to participate.

Hugo Insurance

Founded in 2016, Hugo Insurance is new to the insurance arena, offering its policyholders unique, pay-per-mile insurance coverage.

One unique offering is Hugo Insurance’s feature allowing drivers to turn coverage on and off, depending on when they need it. Customers can control this feature using the Hugo Insurance mobile. Hugo Insurance also allows drivers to buy liability coverage for 3, 7, 14, or 30 days, so they only pay for the length of coverage they need. 

However, Hugo isn’t available everywhere, and the company only offers liability coverage. 

Its business model also raises questions about the company’s viability. For example, what happens if a driver forgets to turn their insurance back on before driving is unknown. Policyholders could also be vulnerable if they turn off their insurance while parking in public.

So, if you’re looking for a developed company with various insurance offerings, you might be better off looking elsewhere for coverage.

Noblr

Noblr Insurance says that the less you drive, the more you’ll save with its pay-per-mile auto insurance coverage. Its mobile app tracks mileage, driving habits, and when you drive to determine your insurance rates.

The company plans to expand to other states, but it’s only available in Arizona, Colorado, Louisiana, Maryland, New Mexico, Ohio, Pennsylvania, and Texas.

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Case Studies: Top Pay-Per-Mile Auto Insurance Coverage

Case Study 1: Sarah’s Savings with Pay-Per-Mile Auto Insurance

Sarah, a freelance graphic designer, switched to pay-per-mile auto insurance to save money on premiums as she rarely used her car. By accurately tracking her mileage, she reduced her monthly premiums by almost 40%. This coverage not only protected her adequately but also resulted in significant savings on her car insurance expenses.

Case Study 2: Mark’s Driving Habits and Insurance Costs

Mark, a sales representative with high mileage, switched to pay-per-mile auto insurance to reduce his costs. By paying premiums based on his actual miles driven, he experienced substantial savings. The tailored pricing model of pay-per-mile coverage reflected his driving habits and significantly reduced his insurance costs.

Case Study 3: Jennifer’s Occasional Driver Discount

Jennifer, a retiree driving locally, switched to pay-per-mile car insurance to avoid overpaying. By accurately reporting her low mileage and safe driving, she received a significant discount, reducing her premiums and providing more suitable coverage.

Case Study 4: David’s Lifestyle Change and Insurance Flexibility

City dweller David embraced a car-free lifestyle but needed occasional access to vehicles through car-sharing. He found pay-per-mile auto insurance, allowing him to stay insured and pay only for the miles driven during car-sharing trips. This flexible coverage aligned with his changing needs and provided a cost-effective solution tailored to his new lifestyle choices.

Case Study 5: Lisa’s Safe Driving Rewards

Cautious driver Lisa sought fairer insurance options and discovered pay-per-mile auto insurance. This coverage provided comprehensive protection while rewarding her safe driving habits with discounted premiums, incentives, and personalized feedback based on her driving data. Lisa was motivated to continue practicing safe driving with the additional benefits offered by the insurer.

The Final Word on Pay-Per-Mile Auto Insurance

If you don’t drive your car frequently and want to save on auto insurance, you should consider getting a quote from a pay-per-mile insurance company. Pay-per-mile auto insurance is a type of coverage that considers your mileage when setting rates.

Most pay-per-mile insurers charge a set base rate and a per-mile rate. Generally, your base rate still considers factors like age and credit score, but not as heavily as standard insurance coverage.

Customers who don’t travel a lot, like remote workers, college students, retirees, and public transportation commuters, could benefit from a pay-per-mile car insurance policy. However, if you drive for work, enjoy long-distance road trips, or want various coverage options, you might be better off with standard insurance.

Since pay-per-mile auto insurance considers your mileage, it’s difficult to know what you’ll pay for coverage. Get a quote from various pay-per-mile auto insurance companies to see what you might pay for coverage, though you should consider how many miles you typically drive.

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