Working From Home? You Could Save Hundreds on Auto Insurance

Do you work from home? This news is for you.

The pandemic changed driving habits for many people, especially those working from home. According to a recent study, more than one out of four workers (26.7%) now work remotely, which is five times that before the pandemic (5.7%). 92% of these employees work remotely at least one day per week. Overall, more than two out of three (68%) American workers would prefer to be fully remote.

Even with the pandemic restrictions easing, many drivers are driving less than they used to. As a result, more drivers have switched to pay-per-mile car insurance, helping them save hundreds of dollars on auto insurance.

What is pay-per-mile car insurance?

Pay-per-mile car insurance has become more popular for drivers since the monthly auto premium is based on the number of miles you drive as opposed to a fixed monthly amount. Auto insurance companies offer the same coverage as a traditional policy, except you pay a low base rate plus several cents for each mile you drive. Companies can now offer more targeted and cheaper policies to meet driver demands.

Insurance companies are able to track the number of miles you drive primarily through "telematics" technology that monitors vehicles in real time through GPS. Telematics can be built into a car such as a Tesla, or require you to plug a device into your car's diagnostic dashboard. Some insurers require you to connect their mobile apps to the devices.

The rate for a pay-per-mile policy will typically consist of two parts: a base rate and a variable rate (cost per mile). The base rate is based on factors such as the driver's gender, age, location, and driving history. The variable portion of the rate is based on actual miles driven. Your monthly premium will vary month to month.

How much does pay-per-mile car insurance cost?

The cost of pay-per-mile car insurance varies based on the auto insurer and the driver. Pay-per-mile can be 30% to 50% cheaper if you are a low-mileage driver. A 35-year-old single male with a good driving record driving 300 miles per month will pay about $80 per month compared to $133 for a traditional policy. This is a savings of $53 per month, or $636 per year. The base rate for a pay-per-mile auto insurance policy for the same driver can range from $45 to $60 a month. The variable rate can range from $0.06 to $0.07 per mile driven.

Should you get a pay-per-mile insurance policy?

This type of car insurance is best for people who don't drive much. In the above example, the pay-per-mile policy is about 40% cheaper than a traditional policy for this particular month. The break-even point is at about 1,000 miles. A driver who drives more than that on a monthly basis would be better off using a traditional policy.

Pay-per-mile insurance is best for low-mileage drivers -- those who work from or close to home, use public transportation, retirees who don't drive often, college students who don't commute, and those with multiple vehicles. After getting your quote from the insurance company, compare both a traditional and pay-per-mile policy to see which one gives you more savings. It is important to take into account long road trips you may take during certain times of the year.

Many drivers have permanently changed their driving behavior due to the pandemic, especially those who now work from home. People who don't drive much may be overpaying for car insurance. Since drivers can now customize auto insurance coverage based on how many miles they drive, they can potentially save hundreds of dollars.