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How Pay-Per-Mile Car Insurance Works: A Guide

If you don’t drive a lot, you may feel like you’re wasting money on car insurance. You might want to consider pay-per-mile car insurance, which lets you pay a daily base rate plus a few cents for every mile you drive.

Not all companies offer pay-per-mile insurance, but if you work from home, are retired or just don’t use your car that often, you could see considerable savings: Metromile, one of the top providers, says drivers could save over 40% compared to traditional insurance.

Here’s how pay-per-mile car insurance works and the standout companies that offer it, based on cost, coverage, customer satisfaction and other factors.

Pay-per-mile car insurance

What is pay-per-mile car insurance?

Most drivers pay a flat rate for car insurance, regardless of how much they drive. However several insurers tout special policies with lower rates for infrequent drivers.

Instead of a standard premium, pay-per-mile insurance charges a low monthly base fee plus a per-mile cost, usually between 4 and 8 cents per mile. Pay-per-mile is a kind of usage-based insurance, an umbrella term encompassing any program that tracks your behavior behind the wheel.

Pay-per-mile policies generally offer similar types of coverage as a traditional policy, including liability insurance and comprehensive and collision coverage, as well as add-ons like personal Injury protection (PIP) and medical payments coverage.

How does pay-per-mile car insurance work?

Pay-per-mile providers track your mileage, usually with an app on your mobile phone or a transmitter plugged in beneath the steering column. The data is sent to your insurance company to tabulate your per-mile total.

Unlike traditional car insurance, premiums for pay-per-mile policies fluctuate from month to month depending on how much and how you drive.

When determining your base rate, most providers also incorporate driving behaviors — like your speed, braking and the time of day you drive (in states where allowed). Per-mile rates average between 4 to 8 cents.

Pay-per-mile car insurance companies

Here’s how individual providers operate.

Best for availability

SmartMiles® by Nationwide
Cost
The best way to estimate your costs is to request a quote
App available
Policy highlights
SmartMiles® is the most widely available pay-per-mile auto insurance, available in 44 states. Mileage is tracked through a device plugged into your vehicle or through your vehicle’s existing system. If you take road trips, only the first 250 miles of driving per day count towards mileage.
Pros
Available in 44 states
250-mile road trip exception
Can save up to 30% according to Nationwide
Cons
Not available in all states
Your driving data is tracked
Who’s this for? SmartMiles by Nationwide is available everywhere but Alaska, Hawaii, Louisiana, New York, North Carolina and Oklahoma. That’s a big plus, since most other providers are only in a handful of states.

Standout benefits: With SmartMiles, base rates and per-mile costs don’t fluctuate over the policy term unless you make changes. Nationwide also offers a discount of up to 10% for safe driving after your first renewal.

Best for affordability

Milewise® from Allstate
Cost
The best way to estimate your costs is to request a quote
App available
Policy highlights
Allstate’s pay-per-mile program is available in 18 states and works through a mobile app and in-car device that tracks mileage. Premiums are paid for after each trip with an account funded from a credit card on file. Milewise users are only charged for the first 250 miles per day (150 miles in Illinois, Indiana, New Jersey Ohio and Oregon).
Pros
Only the first 250 miles a day are tracked
Allstate is rated highly for customer satisfaction by J.D. Power
Cons
Not available in all states
Per-mile rate may fluctuate based on driving behavior
Who’s this for? Milewise from Allstate is truly pay-per-mile car insurance — your premium is paid after each trip with money deducted from a prepaid account funded by a credit card. Milewise is available in Arizona, Delaware, Idaho, Illinois, Indiana, Maryland, Minnesota, Missouri, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Texas, Virginia, Washington, Wisconsin and West Virginia.

Standout benefits: Users can track their daily rate, per-mile costs and mileage through the Milewise app. Rates can fluctuate based on your driving behavior in some states.

Best for discounts

Metromile Auto Insurance
Cost
The best way to estimate your costs is to request a quote
App available
Policy highlights
Metromile is backed by Lemonade and offers pay-per-mile insurance in eight states. Discounts are available for bundling and insuring multiple cars. The Ride Along program tracks driving behavior and offers a discount of up to 15%.
Pros
Quotes available online
Free street-sweeping alerts
Tryout period available
Cons
Only available in eight states
Trip duration, speed and time of day may affect your rate
Who’s this for? Metromile is a subsidiary of Lemonade, one of our top picks for homeowners insurance and renters insurance. Rates start at just $29 a month plus a few cents for each mile you drive, and Metromile also offers discounts for safe driving, insuring multiple cars and bundling with Lemonade homeowners insurance.

Standout benefits: Metromile customers aren’t charged for anything over 250 miles in a day.

Best for active military and veterans

Noblr Auto Insurance by USAA
Cost
The best way to estimate your costs is to request a quote
App available
Policy highlights
Noblr is backed by USAA and offers a by-the-mile auto insurance policy that can help members base their car insurance costs on their driving habits and mileage. It offers a rewards program that can help further reduce costs for those who pay in full or renew their policy after their first six months. It’s only available to USAA members (limited to US military members, veterans and their families).
Pros
Quotes and policy management are available online
Easy-to-use mobile app
Costs won’t exceed a specified maximum for the first 6 months in some states
Cons
Only available in 15 states
Not sufficient coverage for an umbrella insurance policy through USAA
Tracks all trips where you’re in a moving vehicle, and while the app may detect whether you’re a driver or passenger, you may need to change the trip type manually if the app is incorrect
Who’s this for? USAA’s pay-per-mile plan, Noblr is exclusively for active duty service members, veterans and their families.

Standout benefits: Noblr offers discounts for being a new customer, renewing and paying your fixed rate upfront.

Pay-per-mile pros and cons

Benefits and drawbacks of pay-per-mile car insurance

Pros:
Cheaper rates. Pay-per-mile companies tout customers can save more than 40% on average.
Full coverage options. While you might sacrifice extras, you can still get full coverage, plus add-ons like roadside assistance and rental car reimbursement.

Cons
Limited availability. Pay-per-mile isn’t offered in all states or by all providers.
Your bill will fluctuate. Rates are tied to your mileage, so you won’t be sure how much you’ll pay.
Data is collected. Though it could lower your premium, your insurance company will have data on your driving habits

Is pay-per-mile car insurance worth it?

Whether pay-per-view makes sense depends on how much you drive: If you average just 360 miles a month and have a base rate of $45 with a 6-cents-a-mile add-on, your cost would be about $67 a month or $800 a year, according to MileWise.

That compares to $2,329 per year for the average traditional full-coverage policy, per Bankrate data.

Pay-per-mile car insurance is most beneficial if you drive 10,000 miles a year or less, according to data from multiple providers. In 2022, motorists in the U.S. averaged about 13,400 miles per year, according to the Department of Transportation.

These devices track more than your mileage, however, and may share data about your speed, braking, and the time of day you drive. If you are concerned about how your data is shared, think carefully before signing up for pay-per-mile insurance.

FAQs

How much does pay-per-mile insurance cost?

Your base rate will depend on your car, coverage, driving history and state of residency, among other factors. On top of that, you’ll pay a small amount for each mile you drive, typically between 4 and 8 cents.

What companies offer pay-per-mile car insurance?

Who is pay-per-mile car insurance good for?

Car owners who drive less than 10,000 miles a year will save the most with pay-per-mile insurance, including seniors, remote workers and college students. If you have a bad driving record, you may also come out ahead.

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Why trust CNBC Select?

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every pay-per-mile car insurance review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of car insurance products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best car insurance.

Our methodology

To determine the best pay-per-mile car insurance companies, CNBC Select looked at various U.S. car insurance companies that offer this type of coverage.

When narrowing down and selecting the top pay-per-mile insurers, we considered rates, coverage types, availability and customer satisfaction, using data from J.D. Power and the Better Business Bureau

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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