Pay-per-mile car insurance is a policy where you pay for coverage based on how many miles you’ve driven. This is different from traditional car insurance, where there is a predetermined premium cost you pay each month. However, you are still able to buy the same types of coverages—comprehensive, liability, collision and more—from both plans.
Nearly every state requires drivers to have auto insurance, but if you don’t use your car frequently, it can feel like a waste paying for coverage. Pay-per-mile can be a worthwhile savings option if you fit this profile. However, before deciding which insurance policy to buy, you should consider your driving habits to see if pay-per-mile insurance is right for you.
Find out more about car insurance by the mile in this article, including:
How does pay-per-mile work?
Pay-per-mile car insurance is an alternative for drivers who don’t want to pay for a full insurance policy when they don’t drive often. The less frequently you’re on the road, the less you’ll pay under pay-per-mile.This is because driving frequently means you’re more likely to be involved in an accident, making you a greater risk to insure.
Companies that offer pay-per-mile auto insurance use a similar calculation method. Essentially, they charge a base rate and then add the cost per mile.
Base rate + (miles x cost) = pay-per-mile car insurance premium
For example, if your base rate is $29 and you drive 450 miles at 6 cents per mile, you’ll pay $56 that month.
Insurance companies determine your base rate similar to how they would determine your premium for traditional car insurance. Your gender, driving history, age, vehicle model and desired coverage are all used to calculate your base rate. Depending on your insurer, you may be able to get additional discounts on top of your pay-per-mile policy.
To track your miles, most insurers use a small device, called an OBD-II, that is plugged into your car. However, some simply ask you to take a picture of your odometer once per month.
Pay-per-mile insurance isn’t offered in every state, and some insurers, like Liberty Mutual, have restrictions on which vehicles can be covered under this type of policy.
If you’re unable to purchase a pay-per-mile policy, see if your insurer offers low-mileage or usage-based discounts. Usage-based discounts reward drivers who use their car responsibly and practice safe driving habits. These discounts are another way cautious or occasional drivers can potentially save hundreds each year.
Pay-per-mile versus pay-how-you-drive
The main difference between pay-per-mile and pay-how-you-drive is the way rates are calculated. Pay-per-mile is a policy where your rates are calculated based on how many miles you drive, whereas pay-how-you-drive is a discount program determined by how safely you drive.
Pay-how-you-drive customers are rewarded savings for practicing safe driving habits such as avoiding distractions and obeying traffic signs or limits. Your behavior is tracked and recorded using a dashboard device.
Depending on your insurer, you can potentially be penalized if you are recorded taking part in risky behavior, but this is not universal across all companies. For example, Travelers may increase your rates if they find that you are partaking in risky activities like speeding or hard braking. However, under Nationwide’s SmartRide program, your rates will not increase.
Should you switch to pay-per-mile?
If you drive less than the average 13,500 miles per year, you may consider switching to a policy that allows you to pay for insurance by the mile. This could save you hundreds of dollars annually, but only if you don’t drive often. If you use your car regularly, however, you may want to purchase a standard policy because paying for every mile you drive can add up to be more expensive than a regular policy.
Still on the fence about whether a pay-per-mile policy is right for you? Start by tracking your current driving behavior and habits. This will prevent you from underestimating the amount of times you use your car and will help determine if pay-per-mile can save you money. Then, find out which company offers pay-per-mile insurance in your state, as access to insurance by the mile may be limited depending on where you live.
If privacy is a concern for you, then you should think twice before switching to pay-per-mile. Depending on which company you choose, you’ll have a device installed in your car that will track how many miles you drive. The device not only records your mileage, but can also track your driving behavior, location and times the car is active (although some insurers allow you to disable these functions).
Another downside to having insurance by the mile is that some pay-per-mile insurers have restrictions on what vehicles can be covered. Older cars are often ineligible for a pay-per-mile plan because they are not compatible with the mileage tracking device.
See how much pay-per-mile will cost you.
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Companies offering pay-per-mile auto insurance
There are only a few insurance companies currently offering car insurance by the mile. We’ve listed them below, but it’s important to note that many of these insurers are working on expanding to additional states. If they’re not available in your area right now, they might be in the future, so be on the lookout.
| Insurance Company | What states is pay-per-mile insurance available in? |
|---|---|
| Nationwide | AR, AZ, CO, CT, DC, FL, GA, IA, ID, IL, IN, KS, KY, MD, ME, MI, MN, MO, MS, MT, ND, NE, NH, NM, NV, OH, OR, PA, RI, SC, SD, TN, TX, UT, VA, VT, WA, WI, WV, WY |
| Allstate | AZ, DE, FL, ID, IL, IN, MD, MA, NJ, OR, OH, PA, TX, WA, WV, VA |
| Metromile | AZ, CA, IL, NJ, PA, OR, WA, VA |
| Mile Auto | GA, IL, OR |
| Liberty Mutual | CT, VA |
Even if you’re not able to shop for pay-per-mile car insurance in your state, you can still secure some savings by checking to see if your insurer offers a low-mileage discount.
There are only a few insurance companies currently offering car insurance by the mile. We’ve listed them below, but it’s important to note that many of these insurers are working on expanding to additional states. If they’re not available in your area right now, they might be in the future, so be on the lookout.
| Insurer | Estimated Savings | Features |
|---|---|---|
| Nationwide’s Smartmiles | 25%, on average, compared to a traditional Nationwide policy |
|
| Allstate’s Milewise | Up to 30-40%, compared to traditional insurance rates |
|
| Metromile | $741 a year, on average |
|
| Mile Auto | 30-40%, compared to your current rates |
|
| Liberty Mutual’s ByMile | 25%, on average, compared to a traditional car insurance policy |
|
Mileage and driving changes during the pandemic
COVID-19 has changed American’s driving habits. Since the beginning of the pandemic, Americans have driven nearly 363 billion fewer miles. That adds up to 133 fewer miles every month for every driver in the United States.
The drop in miles driven, however, varies significantly from state to state. In Delaware, drivers drove 38% fewer miles per person. Compare that to Montana, where drivers averaged only a 0.8% drop in the number of miles driven.
| State | Average miles driven per person (Dec 2019 - Jan 2020) | Average miles driven per person (Dec 2020 - Jan 2021) | % change in miles driven |
|---|---|---|---|
| United States | 1234 | 1101 | -10.8% |
| Delaware | 1061 | 658 | -38.0% |
| Hawaii | 945 | 766 | -19.0% |
| Massachusetts | 1121 | 927 | -17.3% |
| Pennsylvania | 895 | 743 | -17.0% |
| Vermont | 1132 | 941 | -16.9% |
| New Jersey | 997 | 831 | -16.7% |
| Connecticut | 983 | 823 | -16.3% |
| Michigan | 1265 | 1059 | -16.3% |
| New York | 878 | 746 | -15.0% |
| Rhode Island | 654 | 557 | -14.9% |
| New Hampshire | 1037 | 883 | -14.8% |
| Illinois | 1021 | 870 | -14.8% |
| West Virginia | 1297 | 1110 | -14.4% |
| Maryland | 1122 | 965 | -14.0% |
| California | 1146 | 986 | -13.9% |
| Ohio | 1206 | 1050 | -12.9% |
| Minnesota | 1403 | 1223 | -12.8% |
| Washington | 1018 | 898 | -11.8% |
| New Mexico | 1551 | 1373 | -11.4% |
| Colorado | 1203 | 1065 | -11.4% |
| Virginia | 1025 | 912 | -11.0% |
| Nevada | 1330 | 1186 | -10.8% |
| Kentucky | 1363 | 1225 | -10.1% |
| North Carolina | 1434 | 1290 | -10.0% |
| Utah | 1286 | 1160 | -9.8% |
| Alaska | 795 | 718 | -9.8% |
| Maine | 1137 | 1032 | -9.3% |
| North Dakota | 1488 | 1354 | -9.0% |
| Iowa | 1177 | 1071 | -9.0% |
| Indiana | 1543 | 1405 | -9.0% |
| South Carolina | 1299 | 1183 | -8.9% |
| Florida | 1404 | 1287 | -8.3% |
| Georgia | 1639 | 1503 | -8.3% |
| Kansas | 1288 | 1181 | -8.3% |
| Nebraska | 1149 | 1060 | -7.8% |
| Oregon | 967 | 892 | -7.8% |
| Texas | 1461 | 1352 | -7.4% |
| Oklahoma | 1420 | 1319 | -7.1% |
| Wisconsin | 1438 | 1343 | -6.6% |
| Louisiana | 1260 | 1179 | -6.4% |
| Missouri | 1483 | 1392 | -6.1% |
| Alabama | 1479 | 1395 | -5.7% |
| Arizona | 1271 | 1206 | -5.1% |
| Tennessee | 1492 | 1421 | -4.7% |
| Arkansas | 1545 | 1472 | -4.7% |
| Mississippi | 1574 | 1503 | -4.5% |
| Wyoming | 1517 | 1471 | -3.0% |
| South Dakota | 1130 | 1110 | -1.8% |
| Idaho | 1187 | 1169 | -1.5% |
| Montana | 1113 | 1104 | -0.80% |
| Methodology: We looked at Federal Highway Administration (FHWA) data on traffic volume average vehicle miles traveled per person from December 2019 and January 2020 and compared the average miles traveled in December 2020 and January 2021. States ranked closer to 1 had a larger decrease in driving and states ranked closer to 50 had a smaller decrease. | |||
One of the biggest driving changes we noticed during the pandemic is a significant decline in long-distance road trips.
In 2019, people took 1.16 billion trips of 250 miles or more. In 2020, the number of trips over 250 miles dropped 43% to 670 million trips.
Drivers in some states still like to hit the road more than others though, we found that drivers in South Carolina, Louisiana and New Mexico had the smallest drop in long-distance trips. Drivers in Delaware, New Hampshire, and Connecticut meanwhile, had the biggest drop in long-distance trips.
| State | Decline in road trips 2019 - 2020 | Road trips per person in 2020 |
|---|---|---|
| Alabama | -30.6% | 2.3 |
| Alaska | -34.2% | 2.1 |
| Arizona | -43.2% | 2.1 |
| Arkansas | -30.9% | 2.5 |
| California | -39.5% | 1.7 |
| Colorado | -23.1% | 2.6 |
| Connecticut | -72.8% | 1 |
| Delaware | -89.7% | 0.6 |
| Florida | -31.4% | 1.7 |
| Georgia | -36.0% | 3.3 |
| Hawaii | -55.8% | 0.5 |
| Idaho | -23.2% | 3 |
| Illinois | -48.8% | 2.5 |
| Indiana | -45.3% | 2.3 |
| Iowa | -45.5% | 2.3 |
| Kansas | -36.9% | 2.9 |
| Kentucky | -47.8% | 4 |
| Louisiana | -13.1% | 2.2 |
| Louisiana | -13.1% | 1.9 |
| Maine | -62.0% | 1.2 |
| Maryland | -59.9% | 1.6 |
| Massachusetts | -62.4% | 0.9 |
| Michigan | -39.5% | 2 |
| Minnesota | -38.9% | 2.1 |
| Mississippi | -29.7% | 3.1 |
| Missouri | -36.9% | 2.7 |
| Montana | -38.0% | 2.6 |
| Nebraska | -39.7% | 2.8 |
| Nevada | -47.3% | 2.5 |
| New Hampshire | -76.4% | 0.7 |
| New Jersey | -65.8% | 1.3 |
| New Mexico | -17.6% | 4.2 |
| New York | -51.8% | 1.3 |
| North Carolina | -26.8% | 2.5 |
| North Dakota | -36.5% | 3.6 |
| Ohio | -55.6% | 1.9 |
| Oklahoma | -33.8% | 2 |
| Oregon | -41.9% | 1.7 |
| Pennsylvania | -57.7% | 1.5 |
| Rhode Island | -54.0% | 0.9 |
| South Carolina | -22.8% | 2.3 |
| South Dakota | -37.5% | 3.3 |
| Tennessee | -29.9% | 3.3 |
| Texas | -38.8% | 2.3 |
| Utah | -47.4% | 3.7 |
| Vermont | -67.7% | 1.3 |
| Virginia | -54.2% | 2 |
| Washington | -34.1% | 1.3 |
| West Virginia | -41.2% | 1.8 |
| Wisconsin | -37.6% | 2.3 |
| Wyoming | -32.6% | 3.4 |
| U.S. Average | -21.6% | 2.1 |
| Methodology: To find the number of road trips per capita we looked at the Bureau of Transportation Statistics data on travel and mobility from 2019-2020. Road trips are defined as trips of 250 miles or more. The number of trips were then calculated on a per capita basis by each state. | ||
The big question: will this trend continue? Our team of analysts here at QuoteWizard found that the answer is yes, but not at the levels we’ve seen over the last year.
In April of 2020, we saw a 64% drop in the number of miles driven nationwide. And while the average number of miles driven has been on the rise since then, it’s recently shown signs of settling at about 10% fewer miles than pre-pandemic levels.
Nationwide, many companies have also indicated that they will continue to allow people to work from home even after the pandemic. This could lead to a stabilization, where people are driving more than at the height of the pandemic but slightly less than they did before the pandemic.
The decline in miles driven also makes pay-per-mile insurance attractive to many drivers. If you're one of the millions of people in the country driving less due to the COVID-19 pandemic, you may want to consider switching to a telematic based program like pay-per-mile insurance.
Pay-per-mile insurance: the bottom line
The best way to see if a pay-per-mile car insurance is ideal for you is to track your driving habits. If your results show that you travel often, pay-per-mile car insurance may cost you more than a traditional policy. However, if you see that you travel less than the national average of 13,500 miles per year, or 1,125 miles per month, ask around to see if a pay-per-mile policy can save you money.
Given that pay-per-mile is not widely available, you should also look into alternative programs and discounts to save you money, including pay-how-you-drive. Most large insurers have various discounts that you may already qualify for. You can find discounts for driving safely, not driving often or installing an anti-theft device in your car. Although they’re not the same as pay-per-mile, these discounts are still a great way of being rewarded for practicing safe driving behaviors.
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