Pay-per-mile car insurance bases your rates mostly on how much you drive instead of things like your age or ZIP code. With pay-per-mile or pay-per-use insurance, you’ll typically pay a base rate plus a per-mile rate.
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Pay-per-use insurance may be worth it if you don’t drive often. You can get per-mile insurance from specialized companies (like Auto Mile) or from larger carriers like Nationwide that have special pay-per-use options.
Key takeaways
Pay-per-mile car insurance is the same coverage as standard auto insurance, but the cost depends on how much you drive.
Rates are usually determined by a base rate plus a per-mile charge.
Some smaller specialty insurance companies specialize in pay-per-use coverage, along with a few larger companies like Nationwide.
Per-mile insurance doesn’t necessarily cost less than regular car insurance.
What is pay-per-mile car insurance?
Pay-per-mile or pay-per-use car insurance is like normal car insurance, except the cost is based on how much you drive instead of the usual factors that go into your car insurance rates.
With pay-per-mile insurance you’ll usually pay a base rate plus a per-mile charge, along with any fees (those are up to the car insurance company). Your base rate depends on your age, location, and other factors that usually determine car insurance premiums.
Like a regular car insurance policy, pay-per-mile insurance comes with necessary coverage like liability or personal injury protection. You can also add more coverage or adjust your limits, just like with a regular policy.
How is your driving tracked?
There are a couple of ways that your pay-per-mile insurance company may track your driving.
A physical device that you plug into your car to track your mileage.
A special smartphone app and that uses your phone’s location-sharing. Some companies may require you to have this on at all times, not just when you’re driving.
Manually reporting the number of miles you traveled in a certain amount of time.
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How does pay-per-mile car insurance work?
Pay-per-mile car insurance uses a simple formula to set rates based on how much you drive.
Let’s say that when you sign up for per-mile insurance, you’re quoted a base rate that’s $40 a month and a per-mile rate that’s 10 cents a month. Since you work from home and usually drive only about 400 miles a month, you could expect to pay:
$40 (base rate) + $40 (400 miles multiplied by 0.10) = $80 in a normal month
If you drive more or less than normal during one month, your rate would also change for that month.
Which companies offer pay-per-mile car insurance?
A few big car insurance companies like Allstate, Nationwide, and Liberty Mutual offer pay-by-the-mile car insurance in some states. Some smaller companies, like Mile Auto, also specialize in per-mile insurance.
Company | Per-mile insurance | Availability |
|---|---|---|
Milewise | AZ, DC, DE, FL, ID, IL, IN, MA, MD, MN, MO, NJ, OH, OK, OR, PA, SC, TX, VA, WA, WI, WV | |
Nationwide | Smartmiles | All but AK, CA, HI, LA, MA, NC, NY, OK |
Liberty Mutual | ByMile | Select states |
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.
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Metromile also offered per-mile car insurance until it was bought by Lemonade in 2022. Lemonade takes miles traveled into account when setting premiums, but it doesn’t offer a standalone per-mile policy like Metromile did.
While they don’t offer per-mile insurance plans, other large car insurance companies like State Farm, Progressive, and USAA, do offer low-mileage discounts for drivers who drive below a certain number of miles annually.
Pay-per-mile vs. usage-based insurance
Like pay-per-mile insurance, usage-based car insurance calculates your rates differently from a standard policy.
But while the cost of usage-based insurance depends partly on how many miles you drive, your mileage probably won’t be the main factor that influences what you pay.
When you sign up for usage-based car insurance, your company monitors your driving for a trial period and gives you a rate according to driving behaviors like speed, braking, when you drive, how often, and how much you drive.
Root Insurance is the most well-known company that specializes in usage-based insurance, but plenty of top car insurance providers also have optional usage-based programs:
Allstate: Drivewise
American Family: KnowYourDrive
GEICO: DriveEasy
Nationwide: SmartRide
State Farm: Drive Safe and Save
Progressive: Snapshot
USAA: Noblr
How much is pay-per-mile car insurance?
We gathered car insurance rates from the pay-per-mile company Mile Auto and found that someone who drives 2,000 miles per year pays just $45 each month for coverage.
Although this is low, we found that average rates for standard car insurance coverage from GEICO and State Farm for the same driver were cheaper than the per-mile car insurance.
Company | 2,000 miles | 5,000 miles | 7,500 miles | 10,000 miles |
|---|---|---|---|---|
Mile Auto | $45 | $52 | $58 | $61 |
Metromile | $70 | $105 | $134 | $163 |
$42 | $42 | $42 | $42 | |
$37 | $37 | $37 | $37 |
Who should use per-mile insurance?
You could benefit from per-mile insurance if you’re someone who doesn’t drive much and has a hard time finding cheap rates. Per-mile insurance could be worth it for:
Young and newly licensed or permitted drivers
Drivers who work from home or rarely commute
Drivers who live in a densely populated city with high average rates
Drivers with bad credit or no credit
Drivers who only drive a few times a month
It’s no sure thing that you’ll pay less for per-mile car insurance than you would for a regular policy, so If you can get cheaper insurance and better service from a standard company, pay-per-mile insurance wouldn’t be worth it.
Environmental benefits of per-mile insurance
One more potential upside of pay-per-mile insurance is its environmental impact. Drivers who want to limit their driving in order to bring down their emissions may also be able to earn lower rates from per-mile insurance.
→ Not sure what you should be paying for car insurance? Estimate your rates here
Per-mile insurance and privacy concerns
As you think about whether pay-per-mile insurance is worth it, you should also think about the potential downsides of sharing data about your driving with your insurance provider.
For example, if your company collects information about your driving habits (like your speed and acceleration) along with your mileage, your rates could go up if you’re recorded speeding or taking sharp turns.
It’s also possible for the app your company uses to monitor your mileage to glitch and cause you to be charged a higher rate, which could be a headache to resolve.
Best pay per mile car insurance: Nationwide’s Smartmiles
Nationwide’s Smartmiles is the best pay-per-mile car insurance because it’s available in nearly every state, only charges you for the first 250 miles you drive in a day, and offers a 10% renewal discount for safe drivers.
Pros
Available in most states
“Roadtrip exemption” after 250 miles
Choice of plug-in or connected smart car tracker
Cons
Not available in New York
Read our full Nationwide car insurance review
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 paying more after the first 250 miles of a long trip.
Nationwide also offers an additional discount to drivers who sign up for Smartmiles, and a 10% discount at renewal if they were accident-free during the last policy period.
As one of the country’s largest insurers, Nationwide is also the best pay-per-mile car insurance company in terms of availability, since you can get it in all but these states:
Alaska
Hawaii
Louisiana
North Carolina
New York
Oklahoma
Frequently Asked Questions
Is it cheaper to pay by the mile for car insurance?
Not always. We found that the cost of pay-per-mile car insurance for an infrequent driver is about the same as a standard policy, but coverage from a per-mile insurance company is more expensive for frequent drivers.
Is pay-per-mile insurance worth it?
Assuming you’re an infrequent driver, per-mile insurance is most likely to be worth it if standard insurance is more expensive for you because of your age, driving history, bad credit, or another factor.
How does low-mileage insurance work?
Low-mileage insurance has the same coverage as regular car insurance, but what you pay depends on your base rate, which varies by driver, and the miles you drive in a month.
How do I get a low-mileage discount?
When you buy car insurance, you’ll estimate the number of miles you drive per year. If you drive significantly less than average, which is around 12,000-14,000 miles a year, you may automatically qualify for a low-mileage discount.
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, 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.
