If you don’t run up a ton of miles on your odometer, you’re reducing the wear and tear on your car as well as saving at the gas pump. You’re also reducing your chances of a car accident. You may be able to find a car insurance policy that sets your rates based on minimal driving.

Pay-per-mile insurance is specifically designed so that you can control your monthly car insurance bill based on how much you drive.

How Pay-Per-Mile Insurance Works

Pay-per-mile car insurance programs charge a daily or monthly base rate that is calculated using factors similar to those used when setting rates for a traditional car insurance policy, such as your driving record, age, vehicle model and location. Then there’s a per-mile charge based on the number of miles you drive. The monthly bill typically is based on the number of miles driven in the previous month.

Here’s an example of what a pay-per-mile plan might look like: You pay a monthly base rate of $29 per month and a per-mile rate of 5 cents. If you drive 500 miles in a month, you would pay a total of $54 for that month ($29 base rate plus 500 miles x $0.05 = $54).

With pay-per-mile insurance, you can get the same coverage types that you would with traditional car insurance. This includes liability car insurance, collision and comprehensive coverage, uninsured motorist coverage and roadside assistance. But you gain more control over the rate you pay because it’s based, in part, on the actual miles you drive.

How Are Miles Measured?

For pay-per-mile programs to work, insurance companies must have an accurate way to measure your miles. Most insurers use a small device that plugs into a port near the steering wheel (called the OBD-II). You might need to have a vehicle that is model year 1996 or newer for the device to work, depending on the insurer. And some devices—such as Nationwide’s—might be incompatible with hybrid vehicles.

For example, Metromile uses Pulse, a device that plugs into a car’s OBD-II and tracks your miles. The device needs to be plugged in at all times so your miles are accurately measured and billed. If you need to unplug the device (such as when you get the car serviced), you’ll need to remember to plug it back in. You should also get an email alert notifying you to plug back in your Pulse.

Not all pay-per-mile insurers use devices that plug into an OBD-II port. For example, Mile Auto requires policyholders to take a photo of their odometers once a month to report mileage.

Related: Low Mileage Car Insurance

How Much Does Pay-Per-Mile Insurance Cost?

Your pay-per-mile car insurance cost will depend on your base rate and the number of miles you drive. For example, if you have a $30 monthly rate and your mileage rate is $0.06 per mile, you would pay $57 if you drove 450 miles in a month ($30 monthly rate + 450 miles x $0.06 = $57).

Some insurers may charge their pay-per-mile rates differently. Two examples include:

  • Allstate Milewise charges a daily rate and a per mile rate. The daily rate is adjusted every six months when your policy renews and the per-mile rate is set using your previous four weeks of driving data.
  • Milewise charges you as you go. You’ll link a debit or credit card to your account and your payment will be processed within 48 hours after you complete your trip.

Some of these programs have caps on miles you pay for per day. So if you take a long road trip, you won’t be hit too hard. For example, Metromile and Nationwide won’t charge for more than 250 miles driven in a day.

Who Benefits From Pay-Per-Mile Insurance?

Drivers who don’t drive many miles could benefit from pay-per-mile insurance. But what constitutes “not driving much”? On average, Americans drive 13,476 miles a year, according to the Federal Highway Administration.

For example, if you were charged a base rate of $29 a month, a per-mile rate of 5 cents and drove 500 miles per month, you would pay a total of $54 a month for pay-per-mile car insurance. However, if you drive as much as the average American each month (1,123 miles), you’d pay about $85 a month.

When considering how much you drive, don’t mistakenly factor in the length of time your commute takes, especially if you spend time sitting in congested traffic.

Car owners who don’t log a lot of miles might include:

  • People who take public transportation to work and drive only on weekends.
  • People who work from home and don’t commute.
  • People with car leases that have tight mileage restrictions.
  • College students who live on-campus.
  • Retirees who seldom drive.

A pay-per-mile insurance policy might also be appealing for drivers who want to save money based on actual mileage driven versus programs that focus on driving behavior, such as usage-based car insurance.

Try It Before You Buy It

If you’re not sure if pay-per-mile insurance is right for you, you may want to download a third-party mileage tracker app to your smartphone and track your miles. There are both free and paid apps that run in the background and log your miles driven. This could be a good option to track miles if you don’t have consistent daily driving habits, such as commuting to work or school.

Related: Temporary Car Insurance

How to Get Pay-Per-Mile Insurance

Allstate, Metromile, Mile Auto and Nationwide are the main companies that offer pay-per-mile insurance. With all four, you can get rate quotes online and get a better idea of how much you’d pay for coverage based on the miles you drive.

Insurance company Availability of pay-per-mile insurance
Allstate Milewise Arizona, Delaware, Idaho, Illinois, Indiana, Maryland, Massachusetts, New Jersey, Ohio, Oregon, Pennsylvania, Texas, Virginia, Washington, West Virginia
Just Auto Insurance Arizona
Metromile Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia, Washington
Mile Auto Arizona, California, Florida, Georgia, Illinois, Ohio Oregon, Pennsylvania, Tennessee, Texas, Wisconsin
Nationwide SmartMiles SmartMiles is now available in all states except for: Alaska, Hawaii, Louisiana, North Carolina, New York, Oklahoma

Before switching to a pay-per-mile insurance policy, get and compare car insurance quotes from companies that offer a program in your state. Then check your current policy to see if you can get the same level of coverage (or more) with a pay-per-mile program at a lower cost.

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Pay-Per-Mile Auto Insurance Frequently Asked Questions

Does pay-per-mile auto insurance include full coverage car insurance?

Full coverage car insurance typically refers to a policy that includes liability, collision and comprehensive insurance. You can purchase these coverage types with a pay-per-mile policy.

Can I get car insurance discounts with pay-per-mile auto insurance?

You may be able to get car insurance discounts when you purchase a pay-per-mile auto insurance policy, depending on the insurance company. For example, Nationwide’s SmartMiles offers a safe-driver discount.

If you’re thinking about switching to pay-per-mile insurance, it’s a good idea to ask if you’ll qualify for any discounts.

What’s the difference between pay-per-mile auto insurance and usage-based insurance?

A typical pay-per-mile insurance policy calculates your premium with a base rate plus a per-mile rate. For example, you might pay a $29 monthly rate and a $0.05 per-mile rate.

A typical usage-based auto insurance program tracks driving behaviors in addition to mileage, like speeding, harsh braking and the time of day you drive. The better you score overall, the less you’ll pay for car insurance.