Pay-per-mile car insurance is a unique and innovative way for low-mileage drivers to save money on their car insurance premiums. In this guide, we will delve into the world of pay-per-mile auto insurance, exploring how it works, how much it costs, and whether it is worth considering for your coverage needs. Additionally, we will highlight some of the top car insurance companies that offer pay-as-you-go options, giving you a starting point for your search for the best coverage.
What Is Pay-Per-Mile Insurance?
Pay-per-mile car insurance, also known as pay-per-use insurance, is a type of usage-based insurance that allows drivers to pay for coverage based on the number of miles they drive. This type of insurance is particularly beneficial for individuals who do not accumulate a lot of miles on their vehicles, such as those who work from home or have short commutes.
By opting for pay-per-mile car insurance, drivers can avoid putting excessive wear and tear on their vehicles and save money on gas. These policies often come at a lower cost than traditional insurance policies while still offering the same level of coverage.
How Does Pay-Per-Mile Car Insurance Work?
Pay-per-mile car insurance tracks your driving distance either through a mobile app or a plug-in device installed in your vehicle. Your premiums are calculated based on the total number of miles you drive, with low-mileage drivers receiving lower insurance rates.
There are two main methods through which insurance providers track your miles: a telematics device or a smartphone app. A telematics device is physically installed or plugged into your vehicle, while the app can be downloaded onto your smartphone. These tools collect data on your driving habits, including speed, braking, and mileage, to determine a personalized premium for you.
It is important to note that each insurance company has its own set of rules and regulations for pay-per-mile insurance programs.
How Much Does Pay-Per-Mile Insurance Cost?
While pay-per-mile car insurance rates can vary based on several factors, the average cost typically falls between six to eight cents per mile. In addition to the per-mile rate, there is usually a base rate (charged monthly or daily) that contributes to your overall premium.
To estimate how much you might pay for a pay-per-mile insurance policy, you can calculate your average monthly mileage and multiply it by the per-mile rate offered by the insurance company. Adding this figure to the base rate will give you a rough estimate of your monthly premium.
For example, if you drive 400 miles a month and the insurance company offers a base rate of $35 with a per-mile rate of seven cents, your monthly premium could be around $63. Keep in mind that this is just an estimate, and actual rates may vary.
Is Pay-Per-Mile Insurance Worth It?
Pay-per-mile insurance can be a great option for drivers who do not drive frequently. If you typically drive fewer than 10,000 miles per year, a pay-per-mile insurance policy could be a cost-effective choice for you. However, if you use your vehicle for daily commuting, this type of insurance may not result in significant savings.
Drivers who have high insurance rates due to factors like age and driving history may find pay-per-mile coverage to be a good deal, as mileage-based programs often place less emphasis on these factors. Some insurance providers, such as Metromile, offer trial periods that allow you to test their rates before committing to a policy.
Pay-Per-Mile Car Insurance Companies
Several insurance companies offer pay-per-mile insurance options, with USAA, Nationwide, and Allstate being among the top choices. Each company has its own program specifics and availability, so it is essential to research and compare options before making a decision.
-
USAA: Pay As You Drive
- USAA’s Pay As You Drive program tracks your mileage and driving behavior to tailor your rates towards low mileage. The program offers various coverage options and is available in select states.
-
Nationwide: SmartMiles
- Nationwide’s SmartMiles program uses a base rate and a cost-per-mile variable rate to calculate your monthly premium. The program rewards safe driving behavior and is available in most states.
-
Allstate: Milewise
- Allstate’s Milewise program offers traditional insurance coverage at a per-mile rate, with options for daily and unlimited mileage rates. The program is suitable for various types of drivers and is available in multiple states.
-
Metromile
- Metromile exclusively offers pay-per-mile insurance, with a flat monthly rate and a per-mile rate. The company provides additional benefits through its app and is available in select states.
- Mile Auto
- Mile Auto specializes in pay-per-mile insurance, requiring drivers to submit monthly odometer photos. The company offers full coverage policies at competitive rates in several states.
Alternatives to Pay-Per-Mile Car Insurance
While pay-per-mile insurance can be a good option for low-mileage drivers, there are other alternatives to consider, such as usage-based insurance and low-mileage discounts. These options may offer different benefits and cost structures, so it is essential to explore all possibilities before making a decision.
Usage-based insurance tracks various driving behaviors beyond just mileage, offering discounts based on factors like braking and cornering. Low-mileage discounts and traditional insurance policies are also worth considering, as they may provide competitive rates for drivers with specific needs.
In conclusion, pay-per-mile car insurance can be a valuable choice for drivers who do not drive frequently and want to save money on their premiums. By exploring the top insurance companies that offer pay-as-you-go options and comparing quotes, you can find the best coverage for your unique driving habits and budget.