How Pay-Per-Mile Car Insurance Works

Most pay-per-mile car insurance plans work by charging a small fee per mile in addition to a daily flat rate.

UPDATED: Aug 31, 2022Fact Checked

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Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Written by Sara Routhier
Director of Outreach Sara Routhier

Cynthia Lanctot is an insurance professional with ten years of industry experience. Cynthia is licensed in several states, and holds an associate in claims law, as well as a bachelor’s degree in English. Cynthia’s experience includes the New England and Northeast states. She currently works as a liability claims professional and an occasional online contributor.

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UPDATED: Aug 31, 2022

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A Concise Overview

  • Pay-per-mile car insurance calculates rates similarly to regular auto insurance plans 
  • Pay-per-mile companies will track your mileage through apps, plug-in devices, or odometer pictures to calculate per-mile monthly fees 
  • Not all pay-per-mile programs offer a wide range of auto insurance coverages

Pay-per-mile car insurance, also known as pay-as-you-go car insurance, is a cost-effective usage-based insurance (UBI) option for drivers who commute well under the average 13,000 miles per year. 

Low mileage car insurance usually charges a set daily rate of a few dollars per day, then an additional few cents per mile driven, depending on the company. 

Read on to learn more about car insurance by the mile. This guide covers how it works and where to purchase insurance by the mile. 

Pay-Per-Mile Car Insurance Explained 

A pay-per-mile plan is the best car insurance if you don’t drive much. It’s different from insurance companies offering low-mileage car insurance discounts, and it can save you hundreds of dollars a year. 

For example, companies with UBI offer this coverage at a set rate instead of just giving a discount, so you only pay as much as you drive. 

Generally,  pay-per-use car insurance works by installing a tracking device in your vehicle to track how many miles are driven. Most pay-per-mile plans charge a few dollars a day as the set rate and then a few cents for each mile driven. What drivers pay each month for their auto insurance coverages is calculated based on daily rates and miles driven. 

The base rate of pay-per-mile insurance is calculated the same as regular insurance. Insurance companies will examine your driving history, age, vehicle, and more to determine how much to charge. One of the most significant factors in your pay-per-mile rates is your annual mileage. 

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Drivers Who Should Buy Pay-Per-Mile Insurance 

Paying for car insurance by mileage isn’t for everyone. However, pay-per-mile insurance may be for you if you fit into one of the following categories:

  • Retired or work from home and aren’t logging daily miles on a commute
  • Currently enrolled in college and rarely drive
  • Regularly use public transportation, scooters, or bikes
  • Own a second car you rarely use but want a separate policy for

Generally, those who drive less than 10,000 miles annually will benefit from pay-per-mile insurance. Insurance companies will set their own low-mileage requirements, but less than 10,000 miles is a good rule of thumb to start looking into pay-per-mile insurance quotes.

Car Insurance Companies That Sell Pay-Per-Mile Insurance 

Some major car insurance companies offer pay-per-mile insurance in addition to regular auto insurance plans, and other companies solely sell pay-per-mile insurance. We’ve outlined the primary sellers of low-mileage car insurance and explain how these plans work below.

Allstate Milewise 

Allstate Milewise uses a plug-in device to track the number of miles you drive per day. You can download the Allstate app to see your mileage and pay your bills. 

Allstate will cap your daily mileage at 250 miles, so if you are leaving on a weekend trip, you don’t have to worry about being charged exorbitant amounts if you occasionally drive more than usual. 

Coverage works the same way as a traditional auto insurance policy, but instead of paying a set monthly rate, you’ll pay a daily rate and a small fee per mile driven. Allstate does offer the option to choose an unlimited vehicle policy, and you are only charged a daily rate instead of the combined daily rate and per-mile fee. 

Naturally, the cost of the unlimited policy will be more expensive. However, this option is suitable for those who drive a little more than a pay-per-mile policy average but still drive less than the average driver. 

Esurance Pay Per Mile 

Esurance’s pay-per-mile program is only available in Oregon. Because Esurance is an Allstate company, Esurance customers who live in other states would be better off joining the Allstate Milewise program. 

If you prefer not to switch to Allstate, existing customers can sign up with Esurance’s DriveSense program, which offers discounts based on driving habits. One of the habits tracked is trip duration, so drivers with fewer miles than average will be more likely to earn a discount. 

Hugo Insurance 

Hugo is a new low miles car insurance company that works differently from other pay-per-mile companies. Instead of paying daily and per-mile fees, customers just pay for the days they drive. 

Hugo customers can turn their auto insurance on and off so they don’t pay for days they don’t drive. 

While this may seem like a plus, it can leave drivers vulnerable if they forget to turn their insurance on before leaving for a trip. Hugo also only offers liability coverage on its basic plans. You would have to purchase its most expensive plan to get full coverage on the days you drive. 

Metromile 

Metromile is one of the more well-known pay-per-mile auto insurance companies. The company uses a plug-in device to determine your mileage and charges accordingly. 

Metromile boasts that customers save an average of 47% by switching to its pay-per-mile program. 

Like other pay-per-mile companies, Metromile charges a base monthly rate and then a per-mile rate, so your bill will vary monthly depending on how much you drive. Metromile also provides additional coverages besides liability insurance, such as collision, comprehensive, and roadside assistance. 

Mile Auto 

Mile Auto recommends its program for those who drive less than 10,000 miles annually because it can save drivers 30 to 40% on their car insurance. 

It works differently from other pay-per-mile companies in that Mile Auto doesn’t require you to put a tracking device in your car. Instead, you must take a picture of your odometer each month and submit it to the company. Mile Auto then calculates your monthly per-mile rate in addition to your flat daily rate. 

Mile Auto also provides full coverage policies in addition to basic liability insurance. 

Noblr 

Noblr is another pay-per-mile insurance company that, like Hugo Insurance, is less well-known. It charges a daily and pay-per-mile fee, but it also uses your driving behavior, including what time you drive and hard braking, to calculate your rates. 

Because Noblr tracks driving behaviors, not just mileage, it may not be the best choice for drivers with a poor driving record trying to save. It also operates solely on a smartphone rather than a plug-in device. So, you’ll have to remember to have your phone and app ready to go each time you drive.

The Final Word on Pay-Per-Mile Car Insurance 

Pay-per-mile insurance is worth looking into for drivers who drive fewer than 10,000 miles per year. There are numerous pay-per-mile companies to choose from, with some standing out as better than others. 

If you don’t want to sign up for a pay-per-mile program but still want to find savings, use our free quote comparison tool to find the best auto insurance rates in your area.

Frequently Asked Questions

Does pay-per-mile insurance plans include full coverage? 

No, not every company provides full coverage, which is liability-only combined with collision and comprehensive insurance. For example, Hugo Insurance only offers liability insurance with the majority of its plans.

Can drivers get auto insurance discounts with pay-per-mile insurance? 

Not all pay-per-mile plans offer discounts, as they are already intended to save drivers money. However, you may be able to get discounts for safe driving or for signing up with multiple vehicles on one policy. 

Call your insurer and compare pay-per-mile insurance companies online to see what discounts are available near you.

How do pay-per-mile insurance companies check mileage? 

Pay-per-mile insurance companies check mileage through plug-in devices, smartphone apps, or pictures of the odometer.

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