What Is Pay Per Mile Car Insurance?
Pay-per-mile car insurance is a type of auto insurance where the premium is calculated based on the number of miles you drive. Unlike traditional auto insurance policies, which charge a fixed premium regardless of usage, pay-per-mile insurance adjusts your premium according to your actual mileage. This makes it an ideal option for drivers who do not use their vehicles frequently or only drive short distances.
Who Benefits From Pay-Per-Mile Car Insurance?
Pay-per-mile insurance suits various lifestyles. It is tailor-made for individuals whose driving habits lean towards the less frequent side. These include:
- Work from home professionals: If you’re one of the growing number of people who work remotely, spending most of your time at home rather than on the road, pay-per-mile insurance takes into account your reduced mileage.
- College students: If you’re a student, particularly if you live on or close to campus, you likely don’t use your car as much as you would in other circumstances.
- Individuals who use mass transit : Maybe you’re a fan of public transit, biking, or walking, and you reserve your car for specific occasions.
- Secondary vehicle owners : If you have a second vehicle that you only use occasionally, such as for weekend getaways or specific errands, pay-per-mile insurance provides a cost-efficient way to keep that vehicle insured without the hefty price tag of a standard policy.
The average American drives about 13,500 miles per year. But it’s not clear how few miles you have to drive to benefit from pay-per-mile insurance. Some companies, like Mile Auto, say if you drive less than 10,000 miles annually, you might be paying too much for regular car insurance.
Nationwide’s SmartMiles program, on the other hand, is designed for those driving less than 8,000 miles annually. The key is to find the right fit for your unique driving habits.
How Pay-Per-Mile Car Insurance Works?
Benefits of Pay-Per-Mile Insurance
- Cost Savings: One of the most significant advantages of pay-per-mile insurance is the potential for cost savings. Traditional car insurance often involves a one-size-fits-all approach that may not be fair to low-mileage drivers. Pay-per-mile policies, on the other hand, ensure that you only pay for what you use. This can lead to substantial savings, particularly for drivers who average less than 10,000 miles per year.
- Encouragement of Safer Driving Habits: Since your premium is directly tied to how much you drive, pay-per-mile insurance naturally encourages more mindful driving habits. Drivers may become more selective about their trips, reducing unnecessary travel, which can lead to safer roads and a lower risk of accidents.
- Environmental Benefits: Less driving not only saves money but also reduces your carbon footprint. With pay-per-mile insurance incentivizing fewer miles on the road, there could be a positive environmental impact. This is particularly relevant in urban areas where traffic congestion and pollution are significant concerns.
- Flexibility and Control: Pay-per-mile insurance offers more flexibility than traditional policies. You have greater control over your insurance costs by simply driving less. For people who work from home, use public transportation regularly, or live in walkable communities, this flexibility can be particularly advantageous.
Companies Offering Pay-Per-Mile Insurance
Only a few insurance companies offer pay-per-mile insurance. It’s important to know which one is reliable and offers the cheapest pay per mile insurance. We will explore both smaller specialized companies and larger ones that have embraced this approach in the changing industry.
- Allstate Milewise : Allstate, a well-known insurance company, has a program called Milewise. It uses a device in your car and a mobile app to track your driving. This program is available in many states like AZ, D.C., DE, FL, ID, IL, IN, MA, MD, NJ, OH, OK, OR, PA, TX, VA, WA, WI, and WV.
- Metromile : Metromile offers car insurance based on how much you drive. They use a plug-in device installed in your car to track your driving. This data helps them set rates when you renew your policy in certain states like AZ, IL, OR, and VA. Metromile provides coverage in AZ, CA, IL, NJ, OR, PA, VA, and WA.
- Mile Auto: Mile Auto is another insurance company that uses a pay-per-mile system. They ask you to take a photo of your car’s odometer each month to keep track of your mileage accurately. This company provides coverage in states like AZ, CA, FL, GA, IL, OH, OR, PA, TN, TX, WI.
- Nationwide SmartMiles: Nationwide’s SmartMiles program tracks your driving using a device that plugs into your car. It’s available in many states, except Alaska, California, Delaware, Hawaii, Louisiana, Massachusetts, New Jersey, New York, North Carolina, and Oklahoma. If you want to save on your payments, this program is a good option.
There are various companies that provide pay-per-mile insurance. Each company has its own approach and caters to different types of drivers. When selecting a pay-per-mile insurance provider, consider factors such as the states they operate in, how they track mileage, and the flexibility of their program.
Cost Of Pay-Per-Mile Insurance
Pay-per-mile insurance costs vary among different companies and depend on individual factors, much like traditional car insurance rates.
Nationwide offers the SmartMiles program. It is cheaper than their regular car insurance policy, costing about 30% less. For example, if your usual premium is $1,000 annually, with SmartMiles it could be around $300. The rate per mile is usually around 6.5 cents, but it can vary from 2 to 10 cents based on Scharn’s information.
Liberty Mutual’s ByMile and Mile Auto show savings of up to 40% for their customers. Metromile, a supporter of pay-per-mile, reports an average annual savings of $741. Metromile’s website lists the starting rate as $29, but some customers pay even less. Chen, a representative, says the average per-mile rate is between 5 and 7 cents.
It’s noteworthy that Allstate’s Milewise operates slightly differently from other pay-per-mile insurance programs. Milewise applies both a daily rate and a per-mile rate, requiring users to link a credit or debit card to their accounts. Costs are billed upon the completion of each trip, introducing a unique payment structure.
Certain pay-per-mile insurance programs have daily caps on the miles you pay for. This is especially helpful during long road trips. For instance, Metromile and Nationwide set the cap at 250 miles per day, so you won’t be charged excessively for extensive travel. On the other hand, Liberty Mutual has a lower cap of 150 miles per day, meaning you won’t be charged for more than that.
Different pay-per-mile insurance providers have varying pricing, billing methods, and mileage caps. It is crucial to carefully evaluate the specifics of each program to make an informed decision. By considering these details, you can choose the insurance option that suits your driving habits, financial preferences, and coverage needs. Pay-per-mile insurance offers flexible pricing and mileage limits, which can help you customize your auto coverage while keeping within your budget.
What Pay-Per-Mile Insurance Covers?
Pay-per-mile insurance is like regular car insurance but it’s based on how much you drive. It covers things like fixing your car and paying for other people’s medical bills if you cause an accident. It follows the same rules as regular car insurance, meeting the basic requirements set by the law.
Pay-per-mile insurance is flexible. You can add on collision and comprehensive insurance for better coverage. This protects you from expenses when your vehicle needs repairs or replacement, ensuring comprehensive protection in different situations.
But the advantages of pay-per-mile insurance don’t end with comprehensive coverage. Many pay-per-mile insurance policies offer unique features designed to empower you to further save on premiums. These features often include valuable feedback on your driving habits, providing insights that can help you become a more prudent driver. Additionally, you may receive helpful tips on how to enhance your driving skills and habits, contributing to both safer roads and potential reductions in your insurance costs.
Pay-per-mile insurance is a smart choice for drivers who want personalized coverage, cost savings, and the chance to improve their driving skills. It goes beyond the basics, providing practical benefits that suit the needs of modern drivers. It’s not just about meeting insurance requirements; it’s about empowering you to drive with confidence, responsibility, and efficiency.
The Future of Pay-Per-Mile Insurance
- Growing Popularity: As more drivers become aware of the benefits of pay-per-mile insurance, it’s likely that this model will continue to grow in popularity. The rise of remote work and the increasing focus on sustainable living may further accelerate this trend, making it a mainstream option for many U.S. drivers.
- Advancements in Technology: As technology continues to evolve, so too will the methods used to track mileage and calculate premiums. We can expect to see more sophisticated tracking devices, as well as increased integration with other smart technologies in vehicles, providing even more accurate and seamless experiences for drivers.
- Expansion to More States: Currently, pay-per-mile insurance is not available in all states. However, as regulatory frameworks adapt to new insurance models, it’s likely that more states will allow and even encourage the adoption of pay-per-mile policies, providing more options for drivers across the country.
How to Get Started with Pay-Per-Mile Insurance
- Assess Your Driving Habits: Before switching to pay-per-mile insurance, take a close look at your driving habits. Calculate your average monthly mileage to determine if this type of insurance will be cost-effective for you. If you regularly drive long distances, it may not be the best fit.
- Get Quotes: Contact multiple insurance providers to get quotes for both traditional and pay-per-mile policies. This will help you compare the costs and coverage options to make an informed decision.
- Understand the Terms: Read the fine print of any pay-per-mile policy you’re considering. Make sure you understand how your mileage will be tracked, how the billing works, and what happens if you exceed a certain mileage threshold.
- Install the Tracking Device: If you decide to proceed with pay-per-mile insurance, the next step is to install the mileage tracking device or download the tracking app as instructed by your insurer. Ensure that it is set up correctly to avoid any issues with your billing.
- Monitor Your Usage: Once your policy is active, keep an eye on your mileage and usage. Most providers offer online dashboards or mobile apps where you can track your driving and see how it impacts your premiums. This can help you adjust your driving habits to maximize your savings.
Here Are 5 Important FAQs
Pay-per-mile car insurance is beneficial if you don’t drive often. It can be cheaper than a regular auto policy. But if you only plan to drive less for a short period, a regular policy is still better.
Insurance carriers employ several methods to track your mileage. Some insurers use a device installed in your car’s diagnostic port or a mobile app to monitor your mileage. Alternatively, some companies may request that you regularly provide a photo of your vehicle’s odometer.
The best pay-per-mile insurance company depends on where you live and what coverage you need. Metromile and Mile Auto focus on pay per mile auto insurance, but they may not be available everywhere. Allstate Milewise and Nationwide SmartMiles are other options to consider. If you want to bundle your insurance, Allstate and Nationwide are worth looking into. Remember to think about your own situation when choosing the best pay per mile car insurance provider.
About The Author
Andy Walker is a freelance content writer who specializes in writing for insurance and finance related niches. He has years of experience in this field and has written extensively on a variety of topics. Andy’s work is always highly polished and well-researched, ensuring that his clients are always happy with the results.