Should You Switch to Pay-Per-Mile Insurance?

With pay-per-mile insurance, your monthly auto insurance bill will fluctuate based on how much you drive. Pay-per-mile policies include a fixed monthly base rate, plus an additional per-mile fee. You’ll typically need to install a device in your car or use a mobile app that will track your mileage and report it to the insurer.

For example, if your base rate is $35 per month, and the per-mile fee is 5 cents, the cost for 500 miles in November would be $60. If you only drive 200 miles in December, your bill would drop to $45.

November:

December:

Pay-per-mile insurance may include a daily mileage cap, usually around 250 miles, so you won’t pay exorbitant fees for long road trips.

When shopping for pay-per-mile insurance, the process is the same as standard insurance. Your rates will depend on your age, driving record, and other factors. Be sure to shop around for the cheapest rates, as base rates and per-mile fees can vary widely between insurers, which could affect whether a pay-per-mile policy is worth it for you.

Pay-per-mile insurance is ideal for drivers who don’t drive often, such as remote workers, retirees, or those who rely mostly on public transportation. The exact cost analysis will depend on the rates you’re quoted by insurers in your area. It can be worthwhile if you drive fewer than 8,000 to 10,000 miles per year, which is below the average mileage in the U.S.

Keep in mind that your bill can vary month to month, so you’ll need to budget accordingly. While it could save you money overall, you won’t have a predictable annual or bi-annual premium.

Whether pay-per-mile insurance is cheaper than a standard policy depends on the rates you’re quoted, which in turn depend on factors like your driving record, age, and location.

If you drive less than 8,000 to 10,000 miles a year, pay-per-mile insurance may be cheaper. However, you’ll need to do the math to figure out which option is best for you.

For example, if you drive around 10,000 miles a year, you can estimate that the per-mile fees will total $500 ($0.05 per mile). Adding the monthly base rate of $35 ($420 annually) gives you a total of $920 per year.

Compare this to the annual premiums for standard policies. If you’re quoted $850 for a standard policy, pay-per-mile insurance wouldn’t be worth it. However, if you drive closer to 8,000 miles a year, the pay-per-mile cost of $820 might be cheaper.

Pay-per-mile insurance isn’t available in every state, so check with insurers in your area. Companies that offer this option (depending on the state) include:

Metromile

• Available in: AZ, CA, IL, NJ, OR, PA, VA, WA

Allstate MiIewise

• Available in: DE, ID, MN, WA, WI, WV

Nationwide SmartMiles

• Available in: AL, AR, AZ, AR, CA, CO, CT, DE, DC, FL, GA, IA, ID, IL, IN, KS, KY, MA, MD, ME, MI, MN, MO, MS, MT, ND, NE, NH, NJ, NM, NV, OH, OR, PA, RI, SC, SD, TN, TX, UT, VA, VT, WA, WI, WV, WY

Mile Auto

• Available in: AZ, CA, FL, GA, IL, OH, OR, PA, TN, TX, WI

USAA Noblr

• Available in: AZ, CO, GA, IL, IN, LA, MD, MO, NV, NM, OH, PA, TX, VA, WI

We’ve also reviewed the best pay-per-mile insurance companies.

Pay-per-mile insurance can be a great option for auto insurance if your annual mileage is relatively low. Instead of paying a fixed premium, you’ll pay a monthly base rate in addition to a per-mile fee, meaning your bill will vary depending on how much you drive.

If you live in a state where this policy type is available, get quotes for pay-per-mile and standard insurance from several insurers to determine which offers the best deal. Reevaluate your policy each year, as rates and driving habits can change.

In addition to the best pay-per-mile options, we’ve reviewed the best auto insurance providers for traditional policies.