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Pay-per-mile car insurance: What Is It and who is it for?


Katie Henderson

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A pay-per-mile car insurance policy is a type of auto insurance that charges you based on how many miles you drive, not on your annual mileage. These policies are designed to be more flexible for drivers who don’t have one set driving routine – or those who want to pay less for their monthly premiums!

What Is Pay-Per-Mile Car Insurance?

Pay-per-mile auto insurance allows customers to pay premiums based on how much they drive, which is why drivers must maintain a good driving record.

The idea behind this is that people who travel more are more likely to have an accident. As a result, those that drive less are considered to be safer and command lower rates.

With a pay-per-mile plan, some drivers may discover lower prices. Still, we recommend that consumers compare quotations from multiple providers to see how much they differ in terms of pricing methods and coverage features.

Read on to learn which companies offer pay-per-mile car insurance and if it’s right for you.

What is the pay-per-mile auto insurance model and how does it work?

Customers that buy pay-per-mile car insurance policies are charged a base charge and a per-mile fee.

  • The starting rate is calculated similarly to typical automobile insurance plans, taking into account numerous factors such as your age, vehicle, driving history, and more. The base rate varies from $19 a month up depending on the person.
  • The per-mile cost is typically a few cents. If, for example, you drive 200 miles each month at a cost of 4 cents per mile, you’ll be charged an additional $8.

Carriers will most often employ a tiny device installed in your vehicle to keep track of your miles. Some drivers may find pay-per-mile plans appealing, especially if they’re searching for cheap car insurance but don’t drive regularly.

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Who should switch to a pay-per-mile car insurance?

Pay-per-mile services are most useful to drivers who drive less than the national average of 12,000 miles per year, or 1,000 miles. Even at a few cents per mile, exceeding 12,000 miles plus the base rate makes the service more expensive.

To illustrate how a pay-per-mile service can save you money compared to other insurers, we’ve included an example with an upper limit of up to 1,000 miles per month. Metromile is less expensive than Geico up to 125 monthly miles and State Farm up to 825 monthly miles.

While there are numerous benefits to choosing pay-per-mile auto insurance, it’s important to remember that quotes can vary significantly from one insurer to the next. Some carriers may be more competitive with a pay-per-mile service than others.

You should also be aware of the following potential disadvantages:

  • Only a few states have pay-per-mile insurance.
  • Although several carriers that provide pay-per-mile insurance plans and telematics pricing systems are relatively new and untested, they are often very large international corporations. Their financial stability to meet claims in the long-run has not been assessed against big national insurers.
  • Customers may also express dissatisfaction with pay-per-mile programs like Metromile, which some believe are slower and less efficient in terms of claims processing.

Pay Per Mile Car Insurance Companies

Root Car Insurance


Should You Buy Pay-Per-Mile Car Insurance?

All and all, using a pay-per-mile car insurance service can end up saving you a good deal, but only if you are an infrequent driver. If your driving habits aren’t great either, you should avoid programs that track them, and can end up raising your rates more.

If you think that your company charges too much for the amount of drive, see if there is a discount or program available. Otherwise, compare your current rate to those offered by other firms. Pay-per-mile programs are likely to spread across additional states in the near future.

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