Pay-per-mile insurance can reduce your premiums by tracking your monthly mileage. This type of insurance is cost effective for people who don't drive much.

Written by Amber Reed

Reviewed by Kathleen Flear

Updated on Aug 30, 2023

Table of Contents

What is it?
Cost
How it works
Insurers
Is it worth it?
Pay-as-you-drive
Pay-as-you-drive insurers
Telematics
FAQs

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If you have a car that you don’t drive often, traditional insurance may not be the best insurance option for you; pay-per-mile insurance could save you up to 40% a year on your car insurance if you don’t drive regularly.

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Pay-per-mile insurance: What is it?

Pay-per-mile insurance lets you pay for car insurance based on the number of miles you drive. Drivers that don’t often drive could potentially lower their car insurance premiums in half.

Pay-per-mile is a usage-based insurance. Usage-based policies use telematics devices to track how much you drive and your driving habits so they can determine a car insurance premium specific to you.

There are two types of usage-based insurance:

Pay-per-mile determines your insurance costs based on the number of miles you drive.

Pay-as-you-drive (aka, pay-as-you-go) determines your insurance costs based on your driving habits, which means that your policy could potentially go up if you regularly exhibit bad driving habits.

MORE: How to track gas mileage

How much does pay-per-mile insurance cost?

Generally, pay-per-mile insurance has a base rate that remains consistent from month-to-month coupled with a per-mile cost. The per-mile cost will probably also have a mileage cap somewhere between 150-300 miles per day.

For example, if your policy has a 200 mile limit per month at a rate of five cents per mile, if you drive all 200 miles, you would be charged $10 on top of your base rate.

Just like traditional car insurance quotes, your base rate for a pay-per-mile policy is determined by different factors like age, gender, car make, and model.

How does pay-per-mile car insurance work?

Insurance companies use a telematics device to track your mileage and driving habits. Depending on your telematics program, you could be eligible for discounts if you exhibit

safe driving behavior

If you’re not comfortable with a telematics device collecting your data, some companies offer pay-per-mile insurance without a telematics device. Instead, you send a monthly picture of your odometer to your insurance company.

If you think you would benefit from a telematics program,

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MORE: What is a paid-in-full discount?

Companies that offer pay-per-mile insurance

Here are some of the notable telematics programs offered by top insurance companies.

Company	Estimated Savings	How it works	States available
Allstate (Milewise)	Up to 20% for 10,000 miles	Uses a plug-in telematics device and mobile app to track driving. Your rates include a daily base rate + per-mile rate.	AZ, DC, DE, FL, ID, IL, IN, MA, MD, NJ, OH, OR, PA, TX, VA, WA, WV
Metromile	$741 a year, on average	Uses a plug-in telematics device. You pay a monthly base rate + per-mile rate. * In AZ, IL, OR, and VA, driving behavior is used to set rates when you renew your policy.	AZ, CA, IL, NJ, OR, PA, VA, WA
Mile Auto	Up to 30% to 40% over your previous company	You pay: monthly base rate + per-mile rate. You send a photo of your odometer once a month, no telematics device.	GA, IL, OR
Nationwide (Smartmiles)	Up to 10% for safe driving	Uses a plug-in telematics device. Your rate includes a daily base rate + per-mile rate.	AZ, CO, CT, DC, FL, IA, ID, IL, IN, KS, MD, ME, MN, MO, MT, ND, NE, NH, NM, NV, OH, OR, PA, SC, SD, TX, UT, VA, VT, WA, WI, WY

MORE:

Average car insurance in 2022

Is pay-per-mile insurance worth it?

Pay-per-mile might be worth it if you drive under 13 thousand miles per year.

You might be under this mileage limit if you:

Are a student

Work from home

Regularly take transit or use alternative modes of transportation

Have a

second vehicle

you don’t use often

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Pay-per-mile vs. pay-as-you-drive

Both pay-per-mile and pay-as-you-drive insurance are types of usage-based insurance. The most significant difference between the two is that pay-as-you-drive also tracks driving habits.

If you exhibit bad driving habits like speeding, driving aggressively, hard braking, it could increase your monthly rates because you have a higher probability of getting into an accident.

"Jerry offers an extremely easy and swift process to getting you the cheapest insurance. I was paying a ton of money per month on car insurance, then I discovered Jerry and I’m now saving over $150 per month." — Satisfied Jerry Customer

Who offers pay-as-you-drive insurance?

Company	Offered discounts	How it works	States available
Geico (DriveEasy)	Up to 25% for signing up	Uses app to track driving behavior and creates customized rate Rates increase with risky driving habits	CT, IL, OR, PA, WI
Progressive (Snapshot)	$145 per year, on average	Uses a plug-in telematics device or mobile app to record driving habits and customize rates accordingly Rates increase with risky driving habits	Available in 48 states + Washington, D.C.; not offered in CA and NC. Sign-up discount is not available in AK, HI, and NY.
Root Insurance	Up to $900 a year	Root app tracks your driving for about three weeks After test-drive period, you’ll get a quote *Will only insure good drivers	AR, AZ, CA, CO, CT, DE, GA, IL, IN, IA, KY, LA, MD, MS, MO, MT, ND, NE, NM, NV, OH, OK, OR, PA, SC, TN, TX, UT, VA, WV
Travelers (Intellidrive)	Up to 20%	Mobile app tracks your driving for 90 days Discounts aren’t guaranteed, and drivers could see an increase in rates	AR, AZ, AL, CO, CT, DC, FL, GA, IA, ID, IL, IN, KS, KY, MA, MD, ME, MN, MO, MS, MT, NE, NH, NJ, NM, NV, OK, OH, OR, PA, SC, TN, TX, UT, VA, VT, WA, WI

Telematics 101

There are two types of ways companies use telematics: with a device or through your phone.

Physical trackers work by being plugged into the OBD-II port of your car. All cars produced after 1996 have this port. So, as long as your vehicle was built after 1996, you’re all set!

Regardless of if you use the app or physical tracker, both methods will collect data on your driving habits and distance so your insurance company can calculate how much you have to pay at the end of each month.

Can I get car insurance discounts with pay-per-mile auto insurance?

Depending on the company, your telematics device could also track your driving behavior, which could potentially earn you a discount. Specific discounts vary based on company and state.

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