Pay-per-use car insurance: What to know

Pay-per-use car insurance, or pay-per-mile car insurance, is a type of auto insurance coverage that’s best for people who don’t drive their cars very often.

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By 

Andrew Hurst

Andrew Hurst

Senior Editor & Licensed Auto Insurance Expert

Andrew Hurst is a senior editor and a licensed auto insurance expert at Policygenius. His work has also been featured in The New York Times, The Wall Street Journal, Forbes, USA Today, NPR, Mic, Insurance Business Magazine, ValuePenguin, and Property Casualty 360.

 & Rachael Brennan

Rachael Brennan

Senior Editor & Licensed Auto Insurance Expert

Rachael Brennan is a senior editor and a licensed auto insurance expert at Policygenius. Her work has also been featured in MoneyGeek, Clearsurance, Adweek, Boston Globe, The Ladders, and AutoInsurance.com.

Updated April 21, 2022 | 6 min read

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Pay-per-use or pay-per-mile car insurance works just like a regular policy, except what you pay is based on how much you drive instead of things like your age or ZIP code. Usually, the cost of pay-per-mile auto insurance is a combination of a base rate and a per-mile rate. As you drive, your per-mile rate increases and your policy becomes more expensive.

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If you’re an infrequent driver who’s looking to save money on your car insurance coverage, there are a few different ways to get per-mile insurance. A few companies specialize in pay-per-mile car insurance. Some well known car insurance companies offer pay-per-use insurance programs or discounts for driving less, too.

Key Takeaways

  • Pay-per-use car insurance, also called pay-per-mile insurance, has the same coverage as a standard auto insurance policy — but the cost of coverage depends on how much you drive.

  • The cost of pay-per-mile insurance is usually determined by a base rate plus a per-mile charge.

  • There are a couple of pay-per-use insurance companies, such as Metromile and Auto Mile, that only offer per-mile coverage. A few larger companies also offer per-mile insurance.

  • While pay-per-use car insurance is best for people who don’t drive frequently, a cost comparison between per-mile companies and regular insurance carriers shows savings aren’t significant.

What is pay-per-use car insurance?

Pay-per-use car insurance is a type of coverage that works just like a standard policy, except the cost of per-use insurance is based on how often you drive. The final cost of pay-per-use insurance, also called pay-per-mile car insurance, is usually a base rate plus a per-mile charge, along with any fees (those are up to the insurance provider).

While the methods that insurance companies use to calculate your rates for per-mile auto insurance are different, you won’t receive less coverage than you would from regular car insurance if you switch your policy to pay-by-mile insurance.

Instead, like a regular policy, pay-per-mile insurance comes with the necessary liability, uninsured motorist, and personal injury coverage that you might need to drive in your state. You can also still add more coverage to these standard forms of protection — just as you would with standard car insurance.

→ Read about the types of coverage included in most auto insurance policies

Who should get pay-per-use insurance?

Since you pay as you drive with per-mile insurance, this type of policy is best for people who don’t drive very frequently. You might also consider pay-per-use insurance if you live in a state or city where the cost of car insurance is expensive, or if you’re a young person who’s having trouble finding cheap rates.

For example, if you live in New York City — where rates are among the most expensive in the country — and you don’t usually commute to work and rarely drive on the weekends, changing to pay-per-mile auto insurance could help you get cheaper insurance without sacrificing coverage.

→ Not sure what you should be paying for insurance? Estimate your cost of coverage here

How does pay-per-mile car insurance work?

Pay-per-mile car insurance works just like a regular policy. You make regular payments to keep your policy active. After a crash, your coverage pays for the injuries and property damage that you caused to the other driver and their vehicle (it can also pay for damage to your own car too). Car insurance where you pay by the mile works the same way.

But while most insurance companies calculate your premiums based on factors like your age, location, accident history, credit score, and more, the cost of pay-per-mile car insurance works differently. Instead, these factors influence your base rate and what you’ll pay per mile.

This means that not everyone will pay the same amount per mile — even if they live in the same city or drive the same car.

When you sign up for pay-per-use car insurance coverage and select your coverage limits, the insurance company will ask you to estimate the miles you drive each year. You’ll receive a quote before you finalize your coverage — but what you pay will change each month depending on how much you actually drive.

Pay-per-mile vs. usage-based insurance

Like pay-per-mile insurance, the cost of usage-based car insurance is calculated differently than a regular policy. However, usage-based and per-mile insurance aren’t the same. While the cost of usage-based insurance depends partly on how many miles you drive, your mileage won’t be the main factor that influences what you pay.

When you sign up for usage-based car insurance, your company will monitor your driving for a short period and give you a rate or a discount according to things like your typical speed, braking habits, the times of day you drive, how many trips you take, and how many miles you drive.

Root Insurance is the most well-known company that specializes in usage-based insurance, but the following top car insurance providers also have usage-based programs you can sign up for:

  • State Farm: Drive Safe and Save

  • Progressive: Snapshot

  • USAA: Noblr

  • American Family: KnowYourDrive

  • GEICO: DriveEasy

→ Read more about usage-based car insurance, how it works, and where to get it

How much is pay-per-mile car insurance?

As you might expect, the cost of pay-per-mile car insurance gets more expensive with every mile you drive. We gathered car insurance rates from two pay-per-mile companies — Metromile and Mile Auto — and found that someone who drives 2,000 miles per year pays $45 to $70 each month for coverage.

Although the cost of pay-per-mile car insurance is meant to be more affordable for infrequent drivers, in our study standard coverage from GEICO and State Farm costs less than when you pay for car insurance by the mile.

Company2,000 miles5,000 miles7,500 miles10,000 miles
Mile Auto$45$52$58$61
Metromile$70$105$134$163
State Farm$42$42$42$42
GEICO$37$37$37$37

Monthly cost of minimum-coverage car insurance for a 30-year-old driver living in Chicago who drives between 2,000 and 10,000 per year. Metromile and Mile Auto are pay-per-mile insurance companies.

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Policygenius also compared the cost of pay-per-mile car insurance with a standard insurance policy for someone who drives 12,000 miles each year. 

For this sample driver, the pay-per-mile auto insurance was more expensive than well-known GEICO and State Farm. In our example, coverage from Metromile was the most expensive.

A graph showing how Metromile and Mile Auto compare to the prices of GEICO and State Farm for a car that's driven 10,000 miles per year.

Bottom line: If you rarely use your car and want to avoid high car insurance costs, you should consider pay-per-use insurance. However, it’s not a certainty that you’ll actually pay less for coverage than you would with regular insurance. You should compare your rates before committing to be sure you’re finding the best and cheapest coverage in your area. 

Which companies offer pay-per-mile car insurance?

Besides Metromile and Mile Auto, a few of the most popular companies also offer pay-by-the-mile car insurance. Other companies that don’t offer mileage-based car insurance, like State Farm, Progressive, and USAA, do offer low-mileage discounts and usage-based insurance programs that reward less frequent drivers.

CompanyPer-mile insuranceAvailability
AllstateMilewiseAZ, DC, DE, FL, ID, IL, IN, MA, MD, MN, MO, NJ, OH, OK, OR, PA, SC, TX, VA, WA, WI, WV
NationwideSmartmilesAll but AK, CA, HI, LA, MA, NC, NY, OK
Liberty MutualByMileSelect states

If you’re thinking about switching to a pay-as-you-drive insurance plan, it could be a good idea to get coverage from the same company you already get home or renters insurance from, assuming they offer a usage-based or pay-as-you-drive option — this way, you’ll get a discount for bundling your coverage.

What’s the difference between Allstate’s Milewise and Drivewise?

Allstate offers both Milewise and Drivewise, which may sound the same but aren’t. Milewise is the insurance company’s pay-by-the mile car insurance coverage, while Drivewise is Allstate’s usage-based program that rewards car owners for safe driving. Some other companies also offer both usage-based and per-mile offerings with similar names.

Best pay per mile car insurance: Nationwide’s Smartmiles

Nationwide's Milewise company card

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How we score: Policygenius’ ratings are determined by our editorial team. Our methodology takes multiple factors into account, including pricing, financial ratings, quality of customer service, and other product-specific features.

Nationwide's Milewise company card logo

Nationwide’s Smartmiles is the best pay-per-mile car insurance for its discount opportunity, availability, and road-trip perk.

If you’re thinking about switching your policy to pay-per-use auto insurance, consider Nationwide’s Smartmiles program. Unlike competitors, Nationwide has a road-trip exception feature that lets you avoid more expensive coverage for the first 250 miles of a long trip.

The company also offers an additional special discount to drivers who sign up for Smartmiles. Nationwide lets users get a 10% discount when they renew if they were accident-free during the last policy period. 

Nationwide is also the best pay-per-mile car insurance company in terms of availability. There are just 10 states where coverage isn’t available. However, you can get Nationwide’s Smartmiles everywhere except:

  • Alaska

  • California

  • Hawaii

  • Louisiana

  • Massachusetts

  • North Carolina

  • New York

  • Oklahoma

Frequently Asked Questions

Is it cheaper to pay by the mile for car insurance?

It depends on how much you drive. We found that the cost of pay-per-mile car insurance is nearly equal to a standard policy for a driver who doesn’t use their car often. However, the cost of coverage from a company that specializes in per-mile insurance is much more expensive for someone who drives their car a more typical amount.

Is pay-per-mile insurance worth it?

If pay-per-mile insurance is available in your area, it’s worth comparing rates with standard companies to see which is cheaper for your driving habits. When you request a quote, you don’t have to commit to buying coverage. At worst, you’ll discover that the cost of per-mile insurance isn’t worth it near you compared to a more conventional plan.

How does low-mileage insurance work?

The cost of low-mileage insurance depends on how much you drive. Your driving history, age, location, and other factors affect your base and per-mile rates, but the more you drive ultimately determines what you pay each month.

Methodology

Policygenius compared the cost of pay-per-use car insurance with a typical auto insurance policy by gathering quotes for a driver in Chicago, Illinois. Our sample driver was a 30-year-old male driving a 2017 Toyota Camry. The rates in this study reflect the cost of a policy with Illinois’s minimum insurance requirements, which are:

  • $25,000 of bodily injury liability coverage per person

  • $50,000 of bodily injury liability coverage per accident

  • $20,000 of property damage liability coverage

We manually collected quotes from Mile Auto and Metromile, but rates from the other companies in this study were provided by Quadrant Information Services. Rates provided are a sample of costs. Your actual quotes may differ.