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Pay per mile car insurance - A Complete Guide

If you're an infrequent driver and feel like you pay too much for car insurance, pay-per-mile insurance could be the solution.

Pay-per-mile auto insurance plans are good for people who are retired, work from home, or simply don't drive often. Traditional auto insurance uses an estimate of your annual miles. With pay-per-mile car insurance, you pay a base rate and then a per-mile rate for every mile you actually drive. That can mean really cheap car insurance if you drive very little.

Read on to learn what you need to know about pay-as-you-drive insurance options, how pay-per-mile works, and how much you can expect to save.

  • Pay per mile insurance is a type of auto insurance that bills you by the mile.
  • Metromile claims that an average policyholder who drives 6,000 miles per year can save around $741 a year over a traditional insurance policy.
  • People who don't drive much or drive very short distances should consider purchasing pay-per-mile car insurance.
  • Insurance companies use their own rating factors to determine whether you qualify for this low-cost option.

What is pay-per-mile insurance?

Pay-per-mile insurance, also sometimes referred to as low-mileage car insurance or pay-as-you-go car insurance, is an insurance policy that offers the same coverage, including comprehensive and collision coverage — but is priced based on how much you actually drive.

Many insurance companies offer a low-mileage discount, which works like most other car insurance discounts; if you qualify for it, you get a reduced rate. However, it's still based on an estimated annual mileage, which could be well above what you actually drive.

By contrast, pay-per-mile insurance is an auto insurance policy that is priced by actual miles driven on top of a base rate. How much you drive directly affects what you pay.

This type of policy is good for people who work from home, retirees, college students, and stay-at-home parents. Pay-per-mile company Mile Auto estimates that 65% of American drivers log fewer than 10,000 miles a year, but insurance companies list 12,000 miles a year as the average.

How does pay-per-mile insurance work?

Although it's called pay-per-mile, your premiums are not based solely on how many miles you drive. Pay-per-mile car insurance rates are calculated in two parts.

First, the insurer calculates a base rate using standard insurance variables such as your age, your driving and claims history, the type of vehicle you drive, where you live, and, in most states, your credit history. 

Next, the insurer creates a rate to charge you per mile, which also varies by the driver. Metromile, for example, says its rates start at $29 per month for the base coverage plus "a few cents for each mile you drive."

Companies track mileage either through a device that plugs into the dashboard or through a photo app you use to snap a picture of your odometer. You are then sent a monthly bill, or, as is the case with Allstate Milewise, your bill is deducted from your account within hours of each trip. There's an initial down payment, and the account is replenished from your credit card when it runs out, making it a sort of prepaid insurance plan.

What companies offer pay-per-mile car insurance?

Many companies offer low-mileage discounts. These four companies, however, offer true pay-per-mile car insurance.

The companies, and the states where the pay-per-mile plan is available, are listed below. If your state isn't listed, you still may want to check with the company; these things are constantly changing. It’s worth noting that ByMile, Liberty Mutual’s pay-per-mile program, is no longer listed on the company’s website.


You can get Metromile insurance in eight states: Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia, and Washington.

While it's hard to say what you'll save, one excellent selling point is that Metromile will give you a 250-mile mileage cap (150 miles if you live in New Jersey), so if you decide to make an occasional road trip, where you travel 500 miles in a day, you'll only pay for 250 miles.

Mile Auto

Mile Auto is available in Arizona, California, Georgia, Illinois, Ohio, Oregon, Pennsylvania, and Texas.

Mile Auto states that drivers can save 30-40% with its program compared to traditional auto insurance policies.

Nationwide SmartMiles

SmartMiles is now offered in Washington, D.C., and 44 states. It's not available in Alaska, Hawaii, Louisiana, North Carolina, New York, or Oklahoma.

How much will you save over regular insurance? It's difficult to say, but Nationwide's website promises an average savings of more than 25%.

Milewise from Allstate

Milewise from Allstate is available in 21 states: Arizona, Delaware, Florida, Idaho, Illinois, Indiana, Maryland, Massachusetts, Minnesota, Missouri, New Jersey, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Texas, Virginia, Washington, West Virginia, and Wisconsin. It’s also offered in Washington D.C.

Allstate charges its drivers on the Milewise program a daily rate and then the per-mile rate on top of that (a common formula for pay-per-mile car insurance). The daily rate is reportedly about $2 a day. You can estimate about $60 a month plus the per-mile rate. If your insurance is far above $60 a month, and you don't drive much, you might save a lot.

How much does pay-per-mile car insurance cost?

Pay-per-mile insurance often costs anywhere from three to six cents per mile on top of your base rate. For instance, if your base rate is $60 a month, your per-mile rate is 5 cents, and you covered a distance of 400 miles, then you would pay $89 that month.

This is how you can calculate your per-per-mile insurance cost: base rate + (miles covered in a month × per mile rate).

For example- $60 (base rate) + (400 × 0.05) = $89

The cost of pay-per-mile insurance varies depending on how much you drive and factors such as your driving history, location, and the make and model of your car. Your bill will change from month to month based on actual driving habits that month.

Because pay-per-mile insurance is billed based on actual data each month, it can be difficult to estimate ahead of time how much you'll pay. That makes it hard to compare car insurance quotes for pay-per-mile policies.

How much money can I save with pay-per-mile insurance?

According to data gathered for Insurance.com by Quadrant Information Services, a low-mileage discount cuts the rates on a full-coverage policy by an average of $35 in most states where it is available. The savings are more significant in California because of that state's laws.

Actual pay-per-mile plans, on the other hand, can potentially save you much more than that. They’re difficult to estimate, however, since the rates depend directly on how much you drive.

Be warned, however, that even the per-mile rates can change when your policy renews, based on factors that are tied to the broader insurance market.

When is pay-per-mile auto insurance worth it?

Mile Auto advertises that its policies may be suitable for qualified drivers who log fewer than 10,000 miles per year. Nationwide SmartMiles says the drivers who typically benefit are those who log fewer than 8,000 miles per year. Nationwide SmartMiles also offers up to a 10% discount for safe driving after the first renewal.

Take note, too, that the occasional long trip won't make your bill skyrocket. That's because most companies stop counting for the day after a certain number of miles -- 250 miles at Metromile and Nationwide SmartMiles, for example. (Notable exception: Metromile caps the miles to 150 for New Jersey residents.)

Who should consider pay-per-mile car insurance?

The people who should consider pay-per-mile car insurance are people who don't drive their car much or drive very short distances.

We're all different when it comes to our driving habits, and what you might think is little driving, an insurer might see differently, but a good rule of thumb is that you're a good candidate for pay-per-mile car insurance if:

  1. You're retired. You don’t commute and only drive occasionally to run errands.
  2. You have a short commute. If you drive a few miles or less to work each day and don’t drive much otherwise, pay-per-mile could work for you.
  3. You have access to public transportation. Your vehicle is used only occasionally, and you often use public transit to get around.
  4. You're away at college. Your car is sitting at your parents' home most of the year and is rarely driven. (Most insurance companies offer a student away from home discount, so be sure to compare the two options.)
  5. You work from home. You don’t have a commute and don’t drive much otherwise.
  6. You have a second vehicle. Pay-per-mile might be a good choice on a second car that is rarely driven.

If you don't drive all that much for any reason and feel like you’re paying too much for insurance you don’t use, then you should consider pay-per-mile car insurance.

Do I need to buy new technology to use pay-per-mile insurance?

You will not need to buy any special technology to use mileage-based car insurance. Companies that use a dashboard device will provide you with the device, which plugs into your car's onboard diagnostics port (OBD-II). These ports became standard in automobiles in 1996, so unless your car is more than 24 years old, it should have an OBD-II port. Some of these devices can be paired with a smartphone, if you choose, to monitor things like your driving behavior or your check-engine lights.

If you use Mile Auto, the company has you use your smartphone to take a photo of your odometer each month. If you don’t have a smartphone, however, you won’t be able to use this service.

Pay-per-mile car insurance tips

When it comes to pay-per-mile insurance, the best tip is to make sure you understand how it works and to weigh the pros and cons.

Take a look at the breakdown of the pros and cons below:


  • Pay-per-mile car insurance is cheap. If you don't drive much, you'll pay less for your insurance premiums.
  • Pay-per-mile auto insurance offers more flexibility for drivers than traditional policies do.
  • You can save hundreds of dollars a year with pay-per-mile car insurance.
  • Low mileage drivers can save even if they have any moving violations or at-fault claims.


  • Pay-per-mile insurance or pay-per-use car insurance isn’t available in all states.
  • Pay per mile insurance is only for people who drive less than 10,000 miles a year. It's not cost-effective beyond that, and you can get the same coverage with traditional auto insurance policies.
  • Only a few companies offer pay-per-mile insurance, so it will be difficult for you to comparison shop.
  • Your insurance bill will be different each month, making it harder to budget and harder to compare quotes.

Is telematics car insurance the same as pay-per-mile?

Telematics car insurance, also called usage-based car insurance, tracks driving habits using an in-car tracking device. The in-car tracking devices monitor your driving habits and tendencies, which the company uses to calculate a discount. You can easily access real-time data relevant to your rate with an easy mobile app on the go. It also alerts if there's something wrong with the vehicle.

Pay-per-mile and telematics use the same technology but base rates on different things. Pay-per-mile is only concerned about the distance you drive while telematics may consider your driving habits to determine what risk you present to the insurance company.

Frequently asked questions about pay-per-mile insurance

Does pay per mile insurance offer additional bonus coverage?

Additional benefits may be included or offered as an optional add-on to auto insurance based on mileage, depending on the company. Metromile, for example, automatically includes $1,000 of pet injury protection with its collision and comprehensive policies in all its states except Illinois and Virginia, and roadside assistance can be added.

How is pay-per-mile insurance different from pay-as-you-drive insurance?

Pay As You Drive (PAYD) auto insurance is usage-based insurance, meaning it considers how you drive, not just how far you drive.

Because things like speeding and hard braking are associated with higher accident rates, drivers who do things like maintaining lower speeds and brake softly -- actions tracked by a dashboard device -- are charged less. Usage-based insurance programs sometimes also factor in the number of miles driven, but they are not limited to miles only, as is pay-per-mile car insurance.

Is pay-per-mile insurance cheaper?

It depends on the number of miles you drive. If you drive very few miles, pay-per-mile may be cheaper than a traditional car insurance policy.

Can you lie about mileage on car insurance?

When it comes to pay-per-mile programs, insurance companies need accurate information to measure your miles. Most insurers ask you to install a device in your car to monitor your location, driving speed, and how safely your drive, or they may ask you to take a picture of the odometer on a regular basis. If you make changes to the device and decide not to report them, you could risk cancelation of your insurance.

How do you calculate mileage per year on a car?

It’s good to get into the habit of writing down the mileage on your odometer every year; make it a habit tied to either your registration or insurance renewal. You can also snap a picture of the odometer with your phone. You can track how many miles you drive each year this way.

What happens if you go over your annual mileage?

Annual mileage on your car insurance policy is just an estimate used to calculate rates. It’s not a hard limit that you aren’t allowed to go over. However, if your insurance company finds out that you underestimated your annual mileage on purpose - by saying you don’t commute when you do, for example - it can be considered fraud. Your insurance company can non-renew you or refuse to cover a claim.

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