Pay-Per-Mile Insurance: Is It Worth It?

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If you don’t spend much time on the road, then you might want to consider a pay-per-mile car insurance policy. The basic idea is simple: each month you get charged based on how much you drive.

With a standard car insurance policy, your premiums are fixed. No matter how much (or how little) you drive, your rate won’t change. But with a pay-per-mile policy, less driving equals lower rates. That also means the more you drive, the more you’ll pay.

So how can you know if pay-per-mile insurance is worth it for you? This article covers answers to frequently asked questions about pay-per-mile insurance, including:

What Is Pay-Per-Mile Car Insurance?

When it comes to car insurance, your monthly or yearly rate (premium) mostly comes down to risk. Insurers look at lots of factors like:

  • Your driving history
  • The conditions of the roads around where you live and drive
  • How much it typically costs to repair the type of car you drive after an accident

Another thing insurers consider is how often you’re on the road. The less time you spend driving, the lower your risk of getting in a car accident. Pay-per-mile insurance is a type of car insurance policy that allows drivers to pay premiums based on their number of miles driven. The less you drive, the less you pay.

So, if you don’t spend a lot of time on the road — say you drive less than 10,000 miles annually — pay-per-mile insurance might be a cost-effective option that’s worth considering.

Money expert Clark Howard’s take on the pay-per-mile insurance model is simple:

“Motorists who log mega-miles may cry foul about the idea of [pay-per-mile], but here’s how I see it: You already pay more for gas and maintenance, based on how much more you use your car versus a more casual-use motorist. So, extending that idea to insurance seems to make perfect sense.”

How Does Pay-Per-Mile Insurance Work?

There are two keys to understanding how pay-per-mile auto insurance works:

1. How Your Mileage Is Tracked

Pay-per-mile car insurance uses technology to monitor your mileage as you drive. There are typically two different ways to do this. You can plug a physical device — called a dongle — directly into your car. The dongle tracks and transmits information about your mileage to your insurer. Or — if your insurer has the capability — you can download an app to your smartphone. Like the dongle, the app tracks and transmits info about your driving to your insurer.

Mile Auto is one insurer that tracks mileage differently. You simply take a photo of your odometer every month to share your mileage with the company. I switched to Mile Auto insurance earlier this year and you can read about my pay-per-mile experience here.


2. How You’re Charged for Mileage

Every insurer that offers pay-per-mile coverage will charge you a rate based on two factors. You will have a base rate, which is a fixed amount that you’ll pay every month regardless of how many miles you drive. There is also a variable (or per-mile) rate, which is simply the rate you’re charged per mile driven during a set period of time in addition to your base rate.

Just like with a standard insurance policy, your pay-per-mile insurer determines your base rate by assessing your risk. This means factors like your age, location, and driving history will be reviewed.

Consider this example: Let’s say your base rate is $65 per month and your per-mile rate is $0.05 per mile. Now imagine you drive 850 miles this month. To calculate your rate, multiply your per-mile rate by the number of miles driven. Then, add that number to your base rate.

Take a look at this example using the formula for calculating your monthly rate below:

Pay-Per-Mile Auto Insurance Rate Formula
(Cost Per Mile x Miles Driven) + Base Rate = Monthly Rate
Example: ($0.05 per mile x 850 miles) + $65 = $107.50

Base rates and per-mile rates vary from company to company. For example, Metromile advertises a starting base rate of $29 per month and $0.06 per mile. So far, I’ve found base rates ranging from as low as $29 to around $90. And I’ve found per-mile rates between $0.04 to $0.15. But — depending on the insurer — I’ve also seen some companies charge monthly fees on top of the base and per-mile rates.

Is Pay-Per-Mile Insurance the Same As Usage-Based Insurance?

As pay-per-mile auto insurance companies gain popularity, many traditional auto insurers are offering comparable options that allow members to pay lower rates for driving fewer miles. But not all policies offering to charge you less for driving less are the same! When looking for pay-per-mile insurance, you’ll want to watch out for policies that say “usage-based” in the description.

Usage-based insurance (UBI) is similar to pay-per-mile since your monthly rate can be lowered by driving less. And your insurer will know how many miles you drive by monitoring your driving through a dongle or smartphone app. But there is a big difference in what information your insurer will monitor with a usage-based policy.

With pay-per-mile insurance, your insurer is only monitoring your mileage. As such, the only thing that will affect your premium is how many miles you drive.

But with usage-based insurance, your insurer looks at the quality of your driving in addition to how many miles you drive. This means data related to driving quality — like how suddenly you brake, how fast you’re driving and what times of day (or night) you’re on the road — is collected by your insurer. And the quality of your driving can affect the cost of your insurance or your continued eligibility for the usage-based program.

According to J.D. Power, “Participation in usage-based insurance programs has more than doubled since 2016, with 17% of auto insurance customers now participating in such programs.” So, UBI might be worth considering if you’re looking to lower your rates with a larger insurer. Just make sure you know what data your insurer will collect, how they’ll use it, and that you feel comfortable giving them the required info.


What Companies Offer Pay-Per-Mile Car Insurance?

If you’re interested in pay-per-mile car insurance, there are currently just a handful of companies that may be able to meet your needs. However, your options may be even further limited depending on where you live.


Metromile was founded in 2011 and specializes in pay-per-mile insurance. The company is known for its starting base rate of $29 per month and starting per-mile rate of just six cents. Metromile states that their policyholders, “save 47% on average compared to what they were paying their previous auto insurer.”

To get started with Metromile, the company will send you a device that you must plug into the on-board diagnostic (OBD-II) port. They don’t require a smartphone or Bluetooth technology. When it comes to how much you can drive, Metromile says policyholders aren’t penalized if their annual mileage increases. And the company stops charging your daily per-mile rate once you hit 250 miles in a day (or 150 miles if you live in New Jersey).

All of the standard car insurance coverages are offered, including comprehensive, collision, liability, medical payments, personal injury protection and uninsured/underinsured motorist. You can also get specialty coverages such as glass repair and roadside assistance. But Clark isn’t a fan of getting roadside assistance from your insurance company.

Metromile currently only offer coverage in the following states: Arizona, Illinois, Oregon, and Virginia,.

Mile Auto

Mile Auto is another car insurance company specializing in pay-per-mile insurance. The company offers its policyholders all of the standard car insurance coverages, as well as several optional coverages — like rental reimbursement.

Unlike other pay-pay-mile insurers, Mile Auto doesn’t rely on a dongle or app to track your mileage. The company states that “where you go, how you drive, and where you and your car sleep at night is your business, not your insurance company’s.”

To keep track of your mileage, Mile Auto requires policyholders to send a photo of their odometer once a month. Then, their system known as MVerity will compare your photo to previous readings and authenticate the image for your rate calculation.

Mile Auto currently only offer coverage in the following states: Arizona, Florida, Georgia, Oregon, and Texas.

Milewise® from Allstate

Milewise® from Allstate is the pay-per-mile offering from Allstate insurance. You can get all their standard coverage options on a Milewise® policy. You just need to install a device into your car and/or use an app to participate. But the app collects more than just your mileage.


Allstate says the app is used for transparency. Poliycholders can see how many miles they’ve driven and see their “safe driving trends based on braking, speed and time of day.” A word of caution if you’re considering Milewise©: This language suggests that Milewise© is actually a usage-based program instead of a true pay-per-mile program.

According to the company site, drivers in Arizona, Minnesota, Missouri, Oklahoma, Pennsylvania, South Carolina and Wisconsin will see their rates change depending on how they drive along with how many miles. Specifically:

“For better rates, avoid speeds over 80 mph, sudden braking (slowing down more than 8 mph in one second), and late-night driving between 11 PM and 4 AM.”

Even if your state isn’t currently listed for having rates that change based on your driving behavior, it’s important to be aware that the company does look at driving behavior along with mileage.

With Milewise©, you put money on deposit via a credit card and each day’s miles are deducted from your balance. When your balance is low enough, your account automatically replenishes by billing your credit card on file. If there’s ever a time when you don’t drive for the day, you save money. On days like those, you’ll find that only the daily base rate is deducted from your account — not the per-mile rate.

Milewise© from Allstate currently only offers coverage in the following states: Arizona, Deleware, Idaho, Illinois, Indiana, Maryland, Minnesota, Missouri, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Virginia, Washington, West Virginia, and Wisconsin

Nationwide SmartMiles®

Nationwide offers pay-per-mile insurance through a program known as SmartMiles®. The company allows participants to track mileage in one of two ways. You can plug a dongle directly into your car. Or your car must have connection capabilities to send mileage data directly to Nationwide.

In addition to saving money by driving less, SmartMiles® offers drivers up to a 10% discount, “for safe driving after the first renewal.” The website doesn’t mention that driving quality is collected as part of the SmartMiles® program, but it also doesn’t explain how you qualify for this safe driving discount. So, if you’re considering this option for pay-per-mile insurance, be sure to ask.

The coverages offered for SmartMiles® participants are the same types of coverages offered through a standard policy. But — of course — your rate is calculated by adding your base rate to your per-mile rate. The company provides an example of an actual scenario for a male driver in his mid-thirties with no traffic violations or accidents in the last three years. In the example, the base rate is $60 and the variable rate (or per-mile rate) is $0.07.

If you enroll in SmartMiles®, you’ll qualify for a road trip exception. This means no matter how many miles you drive in a day, only the first 250 miles count towards your variable rate. Any miles after that are not charged on an individual basis.


SmartMiles® is currently available in every state EXCEPT: Alaska, Hawaii, Louisiana, New York, North Carolina, and Oklahoma

Other Companies

You might find that other insurers offer some form of coverage that incentivizes driving less. If you’re shopping around for car insurance, it never hurts to ask if any pay-per-mile program is available. Just remember that some companies may try to sell you on usage-based programs instead of true pay-per-mile programs.

This means you might save money for driving fewer miles, but your insurer will also monitor how you drive. Depending on the company, your driving quality may also impact your monthly rate or eligibility down the line. This isn’t necessarily a bad thing, it’s just important to be aware before you decide on whether a company’s program is right for you. USAA’s Pay as You Drive program (with policies issued by Noblr) is a great example of this.

Should You Get Pay-Per-Mile Car Insurance?

You might be able to save money on car insurance with a pay-per-mile policy if you don’t regularly drive far or often. Exactly how much you save will depend on lots of things like what company you get insurance through, your age, your location, your car and exactly how many miles you drive in a given month. But overall, the consensus is that pay-per-mile is worthy of consideration for drivers who log less than 10,000 miles on the road in a year.

Not sure how many miles you drive in a year? Pay-per-mile is worth looking into if you:

  • Are a retiree and shop/go out primarily around your home
  • Are in college and live on/near campus
  • Live in a highly walkable area
  • Use public transportation regularly
  • Work from home (part or full-time)

Additionally, if you have a secondary car that doesn’t get much use, then consider getting a separate pay-per-mile policy for just this car.

On the flip side, you probably won’t maximize the benefits of a pay-per-mile policy if you have a long work commute, enjoy taking road trips, don’t have access to other forms of transportation, or simply don’t feel comfortable sharing your driving data with an insurance company. And if you rely on your car for work — like ridesharing or food delivery — you likely won’t qualify for a pay-per-mile program.

Final Thoughts

As car insurance rates continue to rise, pay-per-mile insurance is becoming more popular across the auto insurance industry. And if you don’t drive often, it’s worth looking into as a way to keep extra money in your pocket. You can get full coverage at a rate that better reflects your car usage (or lack of).

Before you sign up, just be sure to get clarity on what your insurer will be tracking. Some companies truly only track your mileage. But other companies might collect data related to the quality of your driving as well.

Not ready to commit to pay-per-mile, but still want to save on car insurance? Check out this article with ten ways to save money on car insurance.