Does Pay Per Mile Car Insurance Save You Money?

Fran
Lucy Lazarony
March 22, 2021

With a pay per mile insurance program, your auto insurance rate is based on the number of miles that you drive. Your mileage gets tracked and a per mile rate gets applied. You’ll also pay either a daily or monthly rate. You may be able to save nearly half on car insurance if you choose a per mile policy.

It makes sense that you’d pay so much less for car insurance if you don’t drive much since your chances of having an accident are lower.

Who Offers Pay Per Mile Insurance?

One popular pay per mile program is Allstate’s Milewise program. With Milewise, you pay a low daily rate and a per-mile rate when you drive. Your daily rate with Milewise could be as low as $1.50 per day. But there are other pay per mile options besides Milewise. These include Metromile, Mile Auto, Nationwide’s SmartMiles and LibertyMutual’s ByMile.

Who Saves Money on Pay Per Mile Insurance?

People who benefit the most from pay per mile policies are those who drive infrequently. If you don’t have much of a commute from work, work from home or are retired, a pay per mile policy may make sense to you. Ask yourself, “Do I rarely drive?” If the answer is yes, then you would benefit from pay per mile insurance.

Who Won’t Save from Pay Per Mile Insurance?

Pay per mile programs aren’t for everyone. The pay per mile programs are not beneficial to people who put in average or higher miles on their cars, the average being between 10,000 and 12,000 miles per year.

A pay per mile program is different from a low mileage discount which applies if you drive less than 5,000 miles per year. Pay per mile is also different from temporary insurance. Temporary insurance is short-term insurance sold in seven-day, 14-day or 30- day plans. You can find temporary insurance by filling out a form after entering your zip code with SmartFinancial. Traditional auto insurance companies don’t typically sell temporary insurance for less than six months at a time.

How Does Pay Per Mile Work?

With pay per mile, you pay either a daily rate or a monthly rate and a second variable mileage rate. For example with Metromile, you could pay a monthly rate of $29 and a mileage rate of $12 per month for a total of $41 per month. The mileage rate breaks down this way. You pay $.06 for each mile that you drive. And since you drove 200 miles that month .06 gets multiplied by 200 for a total of 12. The $12 rate plus the monthly rate of $29 gives you a total of $41.

Low mileage rates and low daily rates make pay per mile insurance affordable and much cheaper than standard insurance policies and low-mileage plans. Some Metromile customers save 47 percent on average compared to what they were paying with other insurers.

In addition to low rates, most pay per mile plans include collision and comprehensive coverage. So it is possible to have plenty of traditional auto insurance coverage when you are choosing a pay per mile program.

How do Insurance Companies Track Your Mileage with Pay Per Mile Insurance?

You may need a device that hooks beneath the dashboard and steering wheel column if you opt for pay per mile car insurance coverage. The pay-per-mile device records your mileage and your miles are then multiplied by your pay-per-mile rate.

SmartMiles by Nationwide, Liberty Mutual’s ByMiles, Allstate’s Milewise all track mileage this way. Metromile uses a device called Pulse for its program. Mile Auto simply requests that its customers send a photo of the car’s odometer once a month.

Keep in mind that most pay-per-mile devices are bound to one car. You can’t take the device and use it on another car. Also many pay-per-mile coverages cap out at a certain amount. So if you take a long trip, you won’t spend a lot on insurance, though perhaps more than you usually would.

Are There Per Per Mile Apps for Phone?

Metromile, Liberty Mutual’s ByMiles, Nationwide’s SmartMiles and Allstate’s Milewise have mobile apps for their pay-per-mile customers.

Are There Other Discounts with Pay Per Mile Insurance?

Be sure to ask about discounts for pay per mile programs. Metromile has discounts for good drivers, mature drivers, insuring more than one car and having a vehicle recovery device. Allstate also offers a safe driving bonus every six months that a customer is accident free. Safe drivers with Allstate also earn rewards points for their good habits that can be redeemed for designer products and gift cards. Nationwide’s SmartMiles offers a 10 percent safe driving behavior discount and a road trip exception so only the first 250 miles driven count on a single day.

What’s the Difference Between Pay Per Mile and Pay as You Go?

Pay per mile creates a rate depending on how many miles you drive. Pay as you go uses a base rate depending on your driving habits. With pay as you go programs, positive habits are rewarded and negative habits are penalized with higher insurance rates. Nationwide has both pay per mile and pay as you go programs. Here is an example from an actual customer of the SmartMiles pay per mile program. The customer had a $35 base rate and a variable mileage rate of $60 for a total monthly rate of $95. That $95 rate is $38 less than a traditional auto insurance policy. Nationwide’s SmartRide pay as you go program offers an instant 10 percent discount when you enroll and up to 40 percent savings for safe driving behavior.

Can You Add Coverages to Pay Per Mile Coverage?

Yes, some insurers allow you to add pet insurance, roadside assistance, gap coverage and glass repair. Full insurance coverage which is made up of a liability insurance, collision insurance and comprehensive insurance coverages also can be added to a pay per mile insurance program if yours doesn’t already include it.

How Much Does Pay Per Mile Cost?

There is usually a base monthly rate of $20 or higher and then you’re charged a daily rate based on several factors. Here is a roundup of the factors affecting auto insurance rates.

  • Your state requirements. Each state sets its own auto insurance requirements. You may need to purchase minimum liability insurance coverage and more based on the state where you live.
  • Your age. Very young drivers and very old drivers have more serious accidents and pay more for car insurance. Your age makes a difference to your car insurance.
  • Your car make and model. The type of car you drive and its safety ratings and whether the car is on the top of the most stolen list affects car insurance rates. A car with a high safety rating that is not targeted by thieves will have lower car insurance rates.
  • Your yearly mileage. If you are a low mileage driver, you will pay less for car insurance than a driver that racks up heavy mileage.
  • Your credit history. Most insurance companies use consumer credit ratings when setting auto insurance rates. If you have good credit, you’ll pay a much lower rate than a driver with no credit or bad credit.
  • Your driving record. If you have a clean driving record with no speeding tickets, no DUIs, no at-fault accidents, you’ll pay less for your car insurance. If you have traffic violations on your driving record or an at-fault accident, you will pay much more for your car insurance.
  • Your neighborhood. If you live in a neighborhood with low accident claims and low rates of auto theft, you will pay less for your car insurance. If you live in a neighborhood with high auto accident claims and high crime, you will pay more for your car insurance.
  • Your gender. Men and women pay differently when it comes to car insurance. Young men tend to pay more than young women. Older, middle-age women tend to pay more than their male counterparts.
  • Your marital status. If you are married you will pay less for car insurance. There is a correlation between being married and exhibiting safe driving behavior. Because of this, married drivers pay less for auto insurance than singles.
  • The coverages you choose. How much insurance you choose to buy and the type of coverages you choose affects your insurance premium. For example, a full coverage policy with liability, collision and comprehensive insurance coverages would be more expensive than a liability-only policy.

How Do I Pay for Per Mile Insurance?

Liberty Mutual Bymile customers must pay through recurring credit card payments or through an electronic funds transfer (EFT). With Allstate’s Milewise, when the account reaches its minimum balance, it’s automatically replenished with a credit card that is kept on file. Nationwide’s Smartmiles encourages customers to keep track of mileage and to pay bills online. You also can pay your bills through the Nationwide mobile app.

What Do Pay Per Mile Devices Track Besides Miles?

Allstate’s Milewise device can detect sudden braking, location, speed, time of day that you’re driving. Other insurers do similar tracking. Nationwide’s Smartmiles looks at driving habits to determine if you are eligible for a discount. Metromile examines a customer’s driving behavior to set insurance rates in states such as Arizona, Illinois, Oregon and Virginia. Liberty Mutual uses the driving data it collects to adjust insurance premiums.

Cell phone usage while driving may also be tracked and counted against you with some pay per mile policies. You can avoid this possible penalty by not using a cell phone while driving. Remember that distracted driving is the leading cause of accidents.

Other Telematics Rewards and Discounts

Other than pay per mile, there are other ways to save. With a telematics system, you have a vehicle tracking device installed in your car. This device allows the sending, receiving and storing of data. This data could be the car’s speed, idling time or harsh acceleration, heavy braking, the time of day the car is driven and how often the car is driven. Some telematics programs are tracked through mobile apps. Car insurance customers in telematics programs earn rewards and discounts for good driving behavior detected by the telematics system. Here are some examples of those programs.

Allstate’s Drivewise measures your safe driving behaviors and rewards you for them. Cash rewards are calculated based on safe speed, braking and time of day of driving. Driving under 80 miles per hour, braking with minimal abrupt stops and limited late night trips are all preferred behaviors. With Drivewise, the driving information is tracked through the Allstate mobile app.

Nationwide’s SmartRide rewards you for safe driving. You get a 10 percent discount for signing up and you’ll receive discounts of up to 40 percent based on your good driving habits. You’ll also get personalized feedback on how to make safer driving decisions. Discounts are determined based on miles driven, hard braking and acceleration, idle time stopped in traffic and nighttime driving. To participate in SmartRide, you’ll need to sign up for the mobile app.

Safeco’s RightTrack could save you up to $513 per year for safe driving. You’ll also get a discount for signing up. Enroll in RightTrack, download the mobile app and you’re ready to begin. Drive for 90 days, track your trips in the RightTrack app and Safeco will confirm your discount and apply it to your premium. The specific behaviors observed by RightTrack are braking, acceleration, nighttime driving and total miles driven. Earn positive marks for these driving behaviors and you’ll get discounts on your car insurance.

Find Affordable Car Insurance

State Farm’s Drive Safe & Save offers discounts for driving less, avoiding excessive speeds, hard stops and hard cornering and by limiting nighttime driving. You get a 5 percent discount just for enrolling. To get started, you’ll need to download the Drive Safe & Save app. You can enroll through the app, online or by calling a State Farm agent. To record driving trips, a Bluetooth beacon will be sent to you and you will attach this device behind your rearview mirror.

Root promises to save you hundreds of dollars on your car insurance. To get started, you’ll need to download the Root app. While you drive, Root gathers and analyzes data from your smart phone’s sensors. After a few weeks, you get a car insurance quote based primarily on how you drive. Root considers safe driving to be focused driving, smooth braking, gentle turning and driving at safe hours. Customers that excel in these areas get lower auto insurance rates.

Progressive Snapshot personalizes your car insurance rates based on your driving. How and how much you drive and when you drive determine your insurance rates. You get an automatic discount for signing up for Snapshot. Drivers with Snapshot save an average of $145 a year. With Snapshot, you can choose between the Snapshot mobile app or a plug-in device for tracking your driving behavior. After 30 days, you will be able to check your progress and see if you’ve earned a discount.

Who Offers Pay Per Mile in My State?

Here is a roundup of the states where you can find pay per mile programs.

Mile Auto

Georgia, Illinois, Oregon

Metromile

Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia and Washington

Allstate Milewise

Arizona, Delaware, Idaho, Illinois, Indiana, Maryland, New Jersey, Ohio, Oregon, Texas, Virginia, Washington

Nationwide SmartMiles

Arizona, Colorado, Connecticut, Washington, D.C., Iowa, Idaho, Illinois, Indiana, Maryland, Maine, New Hampshire, New Mexico, Nevada, Ohio, Oregon, Pennsylvania, Texas, Utah, Virginia, Vermont, Washington, Wyoming

What’s Better Pay Per Mile or Low Mileage Driver Discount?

According to Quadrant Information Services, a low mileage discount on a full coverage policy is about $35. To qualify for a low mileage discount, you’ll need to drive less than 5,000 miles per year. This is a nice, small bonus for being a low mileage driver.

But you are much more likely to save more than $35 with a pay-per-mile program. So if you are comfortable with having your mileage tracked as you drive you could enjoy greater savings on your car insurance. Not all pay-per-mile programs are available in every state so check to see what’s available where you live.

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