Don’t Drive Your Car A Lot? Pay-per-mile Car Insurance Can Save You Big Money

car insurance

If you don’t drive a lot to keep your car insurance costs down, you might consider switching to pay per mile or “pay as you go” car insurance. Instead of paying the exact amount each month for car insurance coverage, pay-per-mile insurance allows you to pay a lower flat rate and amount for each mile you drive.

The concept of pay-per-mile auto insurance has existed since at least 1968 and can help certain drivers save money. In 2008, the Brookings Institute found that pay-per-mile insurance could save society ” between $50 billion and $60 billion annually by reducing driving-related damage. ”

Pay-per-mile auto insurance not only saves money, but also gives you more control over how much you drive and spend on gasoline. There are also benefits of knowing the exact cost of each mile you drive. According to Robert Lajdziak of JD Power, “Even non-cheap customers are more satisfied with the price because they have more transparency and control over their insurance premiums.”

Find out how pay-per-mile auto insurance works, which auto insurance companies offer pay-as-you-go insurance, how much money you can save, and whether pay-per-mile auto insurance can be a good choice for you. For more information, find the best choice for the cheapest car insurance.

What is pay-per-mile car insurance?

Pay-per-mile auto insurance bills you monthly based on how much you drive. Instead of paying a fixed premium for your car insurance, you pay a variable amount that fluctuates based on how many miles you have invested in your car.

How does pay per mile car insurance work?

You pay the auto insurance provider the standard base rate and the rate per mile multiplied by the number of miles driven each month.

To track mileage, most pay-per-mile auto insurance providers require you to connect an electronic device to the car’s onboard diagnostic (OBD) port. Also known as telematics, these machines can also track other driving behaviors such as driving speed, acceleration and braking distance.

If you don’t want your car insurance company to track your driving behavior, some companies may allow you to track your mileage through a smartphone app or photo of an odometer.

Who sells pay-per-mile auto insurance?

Four auto insurance providers currently offer pay-as-you-go coverage: Allstate, Metromile, Mile Auto, and Nationwide.

Metromile and Mile Auto are both online-only insurance providers that offer pay-per-mile auto insurance only. Allstate and Nationwide are larger, traditional insurance companies that sell different types of insurance, which can potentially save you even more by bundling home, life, or other insurance.

For military personnel and their families, it’s worth mentioning the “Pay As You Drive” auto insurance program offered by USAA subsidiary Noblr. Its “Use-Based Insurance” (UBI) program lowers your bill when you drive less, but the algorithm that calculates your monthly premium isn’t exactly tied to your mileage, so technically you don’t pay. – Insurance per mile.

Who can get pay-per-mile auto insurance?

Pay-as-you-go auto insurance exists in most of the 50 US states except Alaska, Hawaii, Louisiana, New York, and North Carolina. Account requirements vary by insurer.

The broadest coverage comes from Nationwide SmartMiles, which provides policies in all but the five states listed above. Small, online-only insurance companies offer car insurance per mile in only 8 or 9 states.

How much does pay per mile car insurance cost?

Pay per mile car insurance rates depend on many factors. Individual monthly premiums vary based on age, gender, location, type of car you drive, other drivers in your vehicle and driving history, especially recent speeding tickets, negligence accidents or DUIs.

Compare the pay-per-mile auto insurance providers with the plans below to learn more about how they work and estimated prices for common scenarios. Note: All insurance quotes provided are only estimates of potential pay-per-mile auto insurance costs. The final cost of insurance may differ significantly from the actual insurance quote.

The auto insurance quotes below are based on my personal driving situation. Two drivers, both 50 years old, living in Berkeley, California, who own a 2008 Subaru Outback car. My standard estimate was comprehensive and crash coverage with a deductible of $15,000 per person ($30,000 per accident) bodily injury compensation, $5,000 property damage, $15,000 per person ($30,000 per accident) for injuries to uninsured or underinsured drivers, and $500 each .

Founded in 2011 in California, Metromile was one of the first pay-per-mile auto insurance providers. To track mileage, Metromile uses a device called the Pulse that connects through an OBD port.

Metromile has a fairly small footprint so far, offering insurance policies in eight states: Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia and Washington.

With Metromiles, you’ll be billed for miles every time you drive up to 250 miles per day (150 miles in New Jersey). Metromile claims customers can save an average of 47% compared to what their previous auto insurance companies paid for.”

Based on my location and driving situation, Metromile’s online system adds 6 cents per mile to the base rate of $33 per month. At 500 miles a month or 6,000 miles a year, you pay $63 per month, $756 per year for car insurance. This is for the fairly standard insurance coverage mentioned above.

At a low level of coverage with no crashes and no comprehensive or uninsured driver coverage, Metromile offered me a $20 monthly base rate and 3 cents per mile. If you drive 500 miles a month, you pay $35 per month or $420 per year.

Metromile was acquired by insurance company Lemonadein. 2021. It’s still unclear whether or how Metromiles will be combined with Lemonade’s homeowners, renters and pet insurance products.

Mile Auto, or simply as a company name, Mile is unique in the field of pay-per-mile insurance. Because it doesn’t let you install anything that tracks your car usage and your car usage. driving behavior.

Instead, Mile uses a smartphone app where she can submit photos of her car’s odometer. The app, called MVerity, sends you a monthly reminder with a link that opens your phone’s camera. Take your odometer, upload a photo, and MVerity does the rest. Detects odometer data by verifying the authenticity of vehicles and photos, then comparing the photos to previous driving records.

What’s also unique about Mile Auto is that there is no cap on daily mileage. Even on long trips, you pay for every mile you drive. Mile Auto is available in nine states: Arizona, California, Georgia, Illinois, Ohio, Oregon, Pennsylvania, Tennessee, and Texas.

Based on estimates of location and driving conditions, Mile Auto estimated a base rate of $38.03 per month and 4.2 cents per mile for the same standard crash, comprehensive and uninsured driver coverage parameters I used for Metromiles. Running 500 miles per month will cost you about $59 per month or $708 per year.

But at minimal coverage (using the same minimal injury coverage as Metromile) Mile Auto didn’t offer me any savings. The base fare is $34.68 and the fare per mile is 4.9 cents. If you drive 500 miles a month, you still pay $59 a month or $708 a year. Mile Auto has not yet responded to requests for comment.

Like Metromiles, Nationwide SmartMiles works by connecting a small device that tracks mileage and driving behavior to the car’s OBD port. Also, like most other programs, SmartMiles limits the maximum daily mileage to 250 miles.

Nationwide SmartMiles is available in Washington, DC and 45 states excluding Alaska, Hawaii, Louisiana, New York and North Carolina.

This program does not offer an easy online quotation system. You can get a quote for your existing auto insurance, but there is no explicit monthly base rate or cost per mile.

After a few minutes with a Nationwide representative, I was able to get a quote for coverage similar to the typical insurance scenario described above for Metromile and Mile Auto.

Nationwide expected to pay around $65 a month for 500 miles. The representative said the rate would be 5 cents per mile and the monthly base rate would be $40. $15,000/$30,000 Basic bodily injury liability coverage, collision and comprehensive coverage, $500 deductible, $5,000 property damage, and $15,000/$30,000 uninsured driver coverage.

Milewise is one of Allstate’s two telematics programs. The other is Drivewise, a traditional insurance policy that offers safe driving discounts to those who want to install monitoring devices on their car OBD ports.

Allstate Milewise operates in 21 states, including Arizona, Delaware, Florida, Idaho, Illinois, Indiana, Maryland, Massachusetts, Minnesota, Missouri, New Jersey, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Texas, Virginia, Washington, and the West. Can be used. Virginia, Wisconsin, and Washington DC.

Illinois, Indiana, New Jersey, Ohio and Oregon have a 150 mile limit, but most states limit drivers to a maximum of 250 miles per day.

Since Allstate Milewise is not available in California, we were unable to get an actual estimate for our specific driver situation. An Allstate representative said “Milewise low mileage drivers typically save 50% compared to traditional insurance policies.”.

Rates vary greatly depending on the individual driver and the insurance coverage offered, so we recommend taking the time to complete the online estimate tool or call the company to get a premium estimate per mile based on your specific driving situation.

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