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Pay-Per-Mile Car Insurance

David Chang, ChFC®, CLU®
By: David Chang, ChFC®, CLU®

Our Insurance Expert

Ashley Maready
Check IconFact Checked Ashley Maready
Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.

More people are driving now as pandemic restrictions have eased. Though, many drivers have changed their driving habits to less than their pre-pandemic levels. As a result, pay-per-mile car insurance has become more popular for drivers who want to pay for only what they need.

Best pay-per-mile car insurance

  • Root: Best for safe drivers
  • Nationwide SmartMiles: Best for availability
  • Allstate Milewise: Best for flexibility and perks
  • Metromile: Best for mobile app
  • Mile Auto: Best for privacy

What is pay-per-mile car insurance?

Pay-per-mile car insurance is where your monthly auto premium is based on the number of miles driven. Monthly rates are flexible and vary based on how many miles you actually drive. The insurer offers the typical coverage options as a traditional policy, except you pay a low base rate plus several cents for each mile you drive. This type of car insurance is best for people who don't drive much.

How pay-per-mile car insurance works

With more cars and insurers adopting "telematics," a technology that monitors vehicles in real-time through GPS, insurers can offer customized coverage that is specifically based on drivers' unique needs. Telematics is becoming more widely used by major insurers. Telematics is able to monitor an individual driver's habits behind the wheel.

Telematics can be built into a car such as a Tesla, or require you to plug in a device into your car's diagnostic dashboard. Some insurers require drivers 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 sex, age, location, and driving history. The variable portion of the rate is based on actual miles driven. Unlike a one-size-fits-all policy where the monthly premium is the same, the monthly premium on a pay-per-mile policy will vary month-to-month since the variable portion of the rate is based on mileage.

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

The cost of pay-per-mile car insurance can vary based on the insurer and the driver. Pay-per-mile can be 30% to 50% cheaper if you are a low-mileage driver. Here is an example for a 35-year-old single male with a good driving record driving 500 miles per month.

Pay-Per-Mile Policy Traditional Policy
Base rate: $60 per month $133 per month
Variable rate: $0.07 per mile x 500 miles = $35
Total: $95 Total: $133
Comparing the cost of a pay-per-mile policy vs. a traditional policy

To calculate your monthly payment for a pay-per-mile policy, combine the base premium and the cost per mile multiplied by the number of miles driven in the prior billing cycle (typically the prior month). 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.

In this example, the pay-per-mile policy is about 30% cheaper than a traditional policy for this particular month. The break-even point is just over 1,000 miles. A driver who consistently drives more than that under this policy would be better off using a traditional policy. Auto insurance companies can now offer more targeted and cheaper auto insurance policies to meet driver demands.

Who should get a pay-per-mile insurance policy?

Pay-per-mile insurance is best for low-mileage drivers -- those who use public transportation, retirees who don't drive often, college students who don't commute, those who work close to home, and those with extra vehicles. It's also best for low-mileage vehicles because the variable rate you'll pay depends on how many miles you drive.

Unlimited auto policies are best for high-mileage vehicles because you only pay a base rate -- no matter how many miles you drive. Other people who may benefit from a pay-per-mile insurance policy are weekend drivers, urban commuters, and drivers with leased cars. Leased cars typically have a maximum number of miles you can drive.

Pay-per-mile is also for people who want greater transparency and more control with their insurance costs. According to Kelly Hernandez, associate vice president of personal lines telematics at Nationwide, more consumers are taking advantage of "usage-based capabilities and are saving money as they take more control over the prices of their insurance protection."

Is a pay-per-mile car insurance policy worth it?

Many drivers have permanently changed their driving behavior due to the pandemic, especially those that work from home and are using their vehicles less. A pay-per-mile car insurance policy is worth it if you only drive a few miles per month.

After getting your quote from the insurance company, compare the base and variable rate based on how much you drive with the cost of a traditional policy. If your monthly premium is less than a regular policy, then a pay-per-mile car insurance policy may be worth it. It is important to take into account if you plan on taking long road trips during certain times of the year. Certain insurers will cap the number of miles, ranging from 150 to 250 miles, you pay each day for a covered vehicle if you are taking a long trip.

READ MORE: Compare Car Insurance Rates in 2022

As a result of insurers and drivers adopting telematics at a rapid rate, drivers can customize auto insurance coverage based on how many miles they drive. People who don't drive much may be overpaying for car insurance. Usage-based policies may soon become the norm.

The best pay-per-mile car insurance companies

Best for safe drivers: Root

Although Root doesn’t offer an exact per-per-mile pricing, the premiums it charges are based primarily on driving habits. Conventional auto insurance companies typically rely on demographics such as age, ZIP code, occupation, and credit score to determine coverage rates.

Root differs in that it prioritizes driving behavior above all else when determining rates. Unlike other insurers, Root does not factor in occupation or education level, and Root states that it is dedicated to completely eliminating credit scores from its pricing by 2025.

Using the Root app while driving allows the insurer to collect and analyze data from a smartphone's sensors. After several weeks, Root can provide the driver with a car insurance quote based primarily on their driving behavior and rates are based on their actual driving.

Root states that drivers can save up to $900 a year, and coverage is available in 34 states.

Best for availability: Nationwide SmartMiles

SmartMiles offers the same flexibility and coverage selections as traditional auto insurance policies do. But with SmartMiles, drivers could pay less because the monthly payment is based on the number of miles driven.

Most vehicles manufactured after 1996 are eligible for SmartMiles. Some hybrids and diesel-powered cars may be incompatible with the device. Unlike the other insurers on this list, SmartMiles is available in nearly all states except for:

  • Alaska
  • Hawaii
  • Louisiana
  • North Carolina
  • New York

Best for flexibility: Allstate Milewise

Milewise offers the same coverage and claims service as a regular Allstate policy, but it's based on the miles driven. The Allstate app allows drivers to quickly access their Milewise policy details, account balance, miles driven, and safe driving status.

With Allstate, drivers can choose the Pay-Per-Mile vehicle option, the Unlimited vehicle option, or a combination of the two. With Pay-Per-Mile, drivers are charged a low daily rate and per-mile rate when they drive. Unlimited vehicles are charged only a daily rate, regardless of mileage.

Both Pay-Per-Mile options follow a convenient billing process: When an account balance reaches the minimum, it is automatically replenished from the payment source on file. Pay-Per-Mile uses a user-friendly mobile app and/or website, along with a small device that plugs into a vehicle's diagnostic port, typically located under the steering column.

This device accurately tracks mileage for accurate billing and ensures that Unlimited vehicles receive all the benefits of Pay-Per-Mile, such as trip info, account details, and Allstate Rewards points. Drivers can review their trips and weekly spending to set goals. They can also dig into detailed maps to get personalized driving feedback.

Drivers can also earn Allstate Rewards through the Milewise device. The program allows drivers to earn points for safe driving. They can redeem these points for discounts on merchandise, gift cards, daily deals, local offers, auctions, and more. However, Milewise is only available in 20 states.

Best for mobile app: Metromile

Metromile states that its pay-per-mile insurance saves drivers an average of 47% compared to what they were paying their previous auto insurer. Its monthly base rate starts at $29. All miles over 250 per day are free (150 for New Jersey drivers), so drivers won't have to worry about going over their allotted miles.

It offers flexible coverage options that can be customized to meet individual needs. Its app allows drivers to view their trips, understand their car's health, avoid tickets with street sweeping alerts (available only in select cities), and find a lost or stolen car. Metromile states that it has a 92% stolen car return rate.

Drivers can also file a claim in the app or online. The app guides users through each step of the process. The insurer can even expedite a claim with help from its AI-assisted system.

Metromile is only available in eight states:

  • Washington
  • California
  • Oregon
  • Illinois
  • Arizona
  • Virginia
  • Pennsylvania
  • New Jersey

Best for privacy: Mile Auto

Mile Auto offers pay-per-mile auto insurance without installing a "black box" that tracks all aspects of a car and habits in a car, to provide greater privacy. Mile Auto states that it doesn't like "the thought of your car 'spying' on you."

Instead, its MVerity system will send drivers a series of monthly reminders via text and email when it's time to send in their odometer reading. Each text and email will have a hyperlink to automatically open the camera in a driver's smartphone. It requires drivers to then send a photo of their odometer once a month.

From the photo, MVerity extracts the odometer data, confirms the vehicle and authenticity of the photo, and then compares it to previous odometer readings. It states that Mile customers can save 30% to 40% off of its standard insurance rates. Mile Auto offers "full coverage" auto insurance and is currently available in 11 states:

  • Arizona
  • California
  • Florida
  • Georgia
  • Illinois
  • Ohio
  • Oregon
  • Pennsylvania
  • Tennessee
  • Texas
  • Wisconsin


  • A traditional auto insurance policy charges a set amount per month regardless of the amount of miles you drive. A pay-per-mile insurance policy is based on actual miles driven plus a base rate. If you don't drive often, your rate may be cheaper with a pay-per-mile policy than a traditional policy.

  • A car insurance company can obtain your mileage through several methods. It may ask you directly, get your reading from third-party companies, or use telematics. Telematics is a type of technology that tracks how much you use your car. It can be built into your car or require a device to be plugged into your car's diagnostic dashboard.

  • The typical driver is on the road close to 13,500 miles per year. Low-mileage car insurance is for people who typically drive half that, about 6,000 miles per year. The maximum number of miles varies by insurance company.

    Telematics tracks the number of miles you drive and your driving habits. Pay-per-mile insurance is based on the number of miles you drive. This is different from a low-mileage discount offered by many insurers. A low-mileage discount is a percentage off a monthly premium of a traditional policy.

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