Chris Tepedino is a feature writer that has written extensively about auto insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, researching investigative pieces, and crafting detailed, data-driven features. His works have been featured on CB Blog Nation, Flow Words, Healing Law, WIBW Kansas, and Cinncinati....

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Written by Chris Tepedino
Insurance Feature Writer Chris Tepedino

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Mar 30, 2022

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The Full Review

  • Pay-per-mile car insurance combines a base monthly rate and a per-mile rate
  • Drivers can still get standard insurance coverages with per-mile insurance
  • Metromile, Allstate, and Nationwide offer pay-per-mile auto insurance

With more people working remotely now, paying for expensive car insurance doesn’t make sense. So, instead, drivers look for alternate ways to save money.

Pay-per-mile car insurance offers cheap rates for low-mileage drivers while still providing usual coverage like liability, collision, and comprehensive insurance.

Like with traditional auto insurance, rates vary by company. However, your rate month-to-month also varies, which can make budgeting tricky.

Read more about pay-per-mile car insurance and what companies offer coverage.

How does pay-per-mile car insurance work?

Most drivers spend a lot of time on the road. According to the Federal Highway Administration, drivers average over 13,000 miles each year.

However, some drivers rarely use their vehicles and don’t want to pay for expensive insurance they don’t use. That’s where pay-per-mile car insurance comes in.

Pay-per-mile insurance is like it sounds — drivers pay for each mile they drive. So for low-mileage drivers, auto insurance rates drastically decrease.

Pay-per-mile auto insurance combines a base monthly rate with a per-mile charge to create a total rate that varies based on how much you drive, meaning you decide how much to pay.

Insurers that offer pay-per-mile insurance calculate the base rate with the same factors used to determine standard car insurance rates, including, age, driving record, coverage type, and ZIP code.

However, pay-per-mile insurance charges less because your vehicle is on the road less, meaning you have a lower chance of being in an accident.

The variable portion of your rates is determined by mileage. First, a device plugs into your vehicle to record how many miles you drive. Then, it multiplies your mileage by your cost per mile. Finally, your insurer adds per-mile charges to your base rate.

You only pay the base rate when you don’t use your car. Additionally, pay-per-mile companies cap our daily mileage, usually around 250 miles. So, if you want to take that road trip, don’t worry about racking up substantial mileage costs.

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What companies offer pay-per-mile insurance?

Though most auto insurance companies offer a low-mileage discount, few offer pay-per-mile insurance. However, some top companies offer car insurance by miles driven.

Metromile specializes in pay-per-mile auto insurance, determining rates based on flat monthly and per-mile rates. Additionally, it offers standard coverage and add-ons like roadside assistance and rental car coverage.

Drivers can find Allstate pay-per-mile insurance labeled Milewise. If you have multiple vehicles and rack up more miles on one, Allstate Milewise lets you select unlimited miles for the car you use the most.

Allstate also deducts mileage costs after each trip. So, instead of paying a monthly rate, most drivers wind up paying daily.

Nationwide offers pay-per-mile insurance through SmartMiles. With SmartMiles, drivers plug a device into their vehicle that monitors mileage. Drivers can also get a 10% safe driving discount after renewing SmartMiles coverage.

Metromile, Milewise, and SmartMiles aren’t available everywhere. Instead, your state determines if pay-per-mile car insurance is available. Hopefully, since more people work remotely, every state will allow drivers to save with per-mile insurance.

Remember that Milewise and SmartMiles aren’t telematics programs. Telematics monitors driving behaviors and offers a discount based on your score. Typical pay-per-mile programs only monitor mileage, not driving habits.

How do pay-per-mile car insurance rates compare?

Because pay-per-mile car insurance depends on how much you drive, rates vary significantly. However, drivers who rarely drive may get the cheapest full coverage auto insurance this way.

For example, let’s say your base rate is $30, and you drive 200 miles in a month. If your per-mile rate is $0.06, you will pay $12 for mileage plus $30 a month, making your total $42 a month.

For comparison, this table shows average rates from top auto insurance companies based on the type of coverage.

Average Annual Auto Insurance Rates Based on Coverage Type
CompanyAverage Annual Rate for Low CoverageAverage Annual Rate for Medium CoverageAverage Annual Rate for High Coverage
American Family$3,368.49$3,544.37$3,416.40
Liberty Mutual$5,805.75$6,058.57$6,356.04
State Farm$3,055.40$3,269.80$3,454.80
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On average, drivers pay $300 a month for car insurance. However, for low-mileage drivers, switching to pay-per-mile insurance saves hundreds.

However, carefully consider how you use your vehicle, so you don’t wind up paying more with pay-per-mile coverage.

Who should consider pay-per-mile insurance?

Drivers need to know how to get cheap full coverage auto insurance. While pay-per-mile insurance can save drivers money, it’s not for everyone. Only drivers with low monthly mileage see significant savings.

People who can save with pay-per-mile auto insurance include:

  • Stay at home caregivers
  • Remote workers
  • Commuters who take public transportation
  • Drivers with a rarely used extra car
  • College students who live on campus

Pay-per-mile isn’t a good option for drivers with a long commute or who like to joyride. Although daily charges typically get capped at around 250 miles, pay-per-mile coverage works best if you drive significantly less.

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Pay-Per-Mile Car Insurance: The Bottom Line

Pay-per-mile insurance charges drivers for every mile they drive, using a plug-in device to monitor mileage. Insurance rates combine a fixed base rate with a per-mile charge, so charges vary each month.

Although some car insurance companies, like Metromile, only offer pay-per-mile insurance, other top companies like Allstate and Nationwide also provide this coverage.

Pay-per-mile auto insurance is a good fit for low-mileage drivers, such as stay-at-home parents, remote workers, retirees, and college students who don’t drive to class.

However, drivers who commute to work or like to joyride won’t see significant savings and may even pay more than traditional insurance.