Pay-Per-Mile Car Insurance: Is it Right for You?
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Do you only use your car occasionally and want to get the cheapest auto insurance for that kind of usage? Then you should look into pay-per-mile car insurance, a type of coverage designed specifically for low mileage drivers like you. Instead of charging drivers based on assumptions about how much they will drive, pay-per-mile car insurance allows you to pay only for how many miles you actually put on the car over the course of the year.
This article will give you some information to help you decide whether pay per mile car insurance is right for you. Topics include:
What Is Pay Per Mile Car Insurance?
When buying standard auto insurance, you provide an estimate of how much you drive when you sign up for a policy. Your insurance rate is based on a combination of this estimate and assumptions about the driving habits of vehicle owners in general.
If it turns out that you drive less than the original estimate, you'd still pay an insurance rate based on that estimate. Also, that estimate would not necessarily change when your policy is renewed, even though your driving habits may be different.
This all means that with a traditional car insurance policy, you may end up paying for more than you actually need. Pay-per-mile car insurance is designed to address this issue by making sure the insurance rate is based on the actual miles that you drive.
How Does Pay Per Mile Car Insurance Work?
Pay-per-mile car insurance adjusts your rate to the amount of driving you do. However, just like regular car insurance, your base insurance rate is based on a number of factors such as your age, driving record, gender and type of car. What's different is that the base rate wouldn't include any assumptions about how much you'll actually use the car. Instead, you'll be charged an additional rate later based on your actual mileage.
There are a variety of ways the insurance company can monitor how many miles you drive. This can be as simple as sending a picture of your odometer to the insurance company each month. Or, it could involve using a smartphone app or an in-vehicle telematics system to track your mileage. A telematics system entails a device that electronically tracks your car's movements and other data about how it's being driven. It can relay this information automatically via cellular networks. Most newer cars have telematics built into their GPS, and if yours doesn't, a device can easily be attached to your car's electrical system.
Like traditional insurance policies, pay-per-mile policies give you a choice of the level of coverage you want too. You can buy the minimum, legally-required liability insurance, or more inclusive coverage such as comprehensive and collision insurance. The more coverage you get, the more you'll pay, but it will only be based on how much you actually use your vehicle.
Who Is Pay-Per-Mile Insurance Best For?
What kind of car owners should consider? Generally speaking,pay-per-mile insurance is best for low mileage drivers, but what is a low mileage driver?
According to the US Department of Transportation, the average vehicle in the US is driven a little under 12,000 miles per year. So, if you drive less than that, it might be worth considering pay-per-mile car insurance.
Below are some examples of who pay-per-mile insurance works best for, and who might not be such a good fit:
Good fits for pay-per-mile insurance
New drivers who do just a limited amount of driving
Employees who've shifted from commuting to working from home
Retirees who don't use the car every day
Urban car owners who often walk or take public transportation
Anyone who keeps a car for occasional necessities but doesn't use it every day
Who wouldn't benefit from pay-per-mile car insurance?
People who take a lot of long car trips
Drivers whose mileage varies a lot
Which Car Insurance Companies Offer Pay-Per-Mile Coverage
A variety of different auto insurance companies offer pay per-mile programs, but state-by-state availability varies by company. Here are some popular ones:
Milewise provides Allstate's traditional coverage and claims service, but does so based on the number of miles you drive. You pay a daily base rate plus a per mile rate. Currently this program is available in 21 states: Arizona, Delaware, Florida, Idaho, Illinois, Indiana, Maryland, Minnesota, Missouri, New Jersey, Massachusetts, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina,Texas, Virginia, Washington, West Virginia and Wisconsin.
Nationwide's Smartmiles program not only allows you to pay by the mile, but it even makes exceptions for the occasional long road trip. Only the first 250 miles you log on any given day will count towards your mileage total. Smartmiles is available in every state except: Alaska, California, Hawaii, Louisiana, Massachusetts, North Carolina, New York and Oklahoma.
Metromile claims that its average customer saves 47% from what they were paying previously. Like Nationwide's Smartmiles program, Metromile caps the amount of mileage you can be charged for on any given day at 250 miles (150 miles in New Jersey) so you won't run up your bill too much with the occasional long road trip. Metromile is available in eight states: Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia and Washington.
Mile Auto claims that its pay-per-mile car insurance can save low mileage drivers 30% to 40% off their current rates. If you have privacy concerns about having your driving monitored electronically, you might be interested to know that Mile Auto does not use that kind of system. Instead, drivers report their monthly mileage to the company. Mile Auto is currently available in seven states: Arizona, California, Georgia, Illinois, Ohio, Oregon and Texas.
Liberty Mutual ByMile
Liberty Mutual's ByMile program is one that offers a cap on the daily mileage you can be charged for: no more than 150 miles in a single day will count towards your total. The ByMile program is not available in all states, but Liberty Mutual's web site does not provide details on where it is available.
What Are the Differences Between Pay Per Mile and Telematics?
You may have heard of a form of usage based insurance called telematics. Pay-per-mile is a specific form of telematics insurance.
Telematics refers to a system for electronically monitoring how your car is driven and relaying data to a remote location. You can have data sent to an insurance company to save money if you drive infrequently. More involved telematics programs monitor not just how many miles you drive, but also whether you speed, hard brake, swerve, etc.
Is it Worth it to Get Pay-Per-Mile Car Insurance?
If you are a low mileage driver, pay-per-mile car insurance is certainly worth checking out. Get free quotes on both conventional insurance policies and pay-per-mile programs to see which saves you the most.
Get the Best Car Insurance for Your Needs
Pay-per-mile insurance gives low mileage drivers an option for cheaper rates. However, smart consumers know they can save the most on auto insurance by shopping around, whether they are buying a conventional car insurance policy or a pay-per-mile car insurance policy.
Enter your zip code below and answer a few questions about yourself and your car. Within minutes you will receive multiple car insurance quotes for free. Most drivers save up to 40%, so it's worth three minutes of your time!