Pay-Per-Mile Car Insurance Explained

Pay-per-mile auto insurance is determined by the number of miles you drive plus a base rate from the insurance company. With the right company, you can spend at least $29 plus $0.06 for each mile you drive for the month. However, your pay-per-mile car insurance rates may vary. Shop around and compare multiple insurance companies to compare the best rates.

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Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Written by Sara Routhier
Director of Outreach Sara Routhier

Cynthia Lanctot is an insurance professional with ten years of industry experience. Cynthia is licensed in several states, and holds an associate in claims law, as well as a bachelor’s degree in English. Cynthia’s experience includes the New England and Northeast states. She currently works as a liability claims professional and an occasional online contributor.

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Reviewed by Cynthia Lanctot
Licensed Agent Cynthia Lanctot

UPDATED: Jun 3, 2022

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A Concise Overview

  • Pay-per-mile auto insurance calculates monthly rates based on the miles you drive
  • You can pay as low as $35 a month for pay-per-mile auto insurance
  • Pay-per-mile auto insurance has limited availability across the country
  • People who work from home can benefit from pay-per-mile auto insurance

Pay-per-mile car insurance is a usage-based insurance program that determines monthly rates by the number of miles you drive. But how does an auto insurance company track your mileage every day? And which companies provide pay-per-mile auto insurance?

Don’t worry — we’re here to explain how pay-per-mile car insurance works.

Our guide has everything you need to know about pay-per-mile auto insurance rates, which insurance companies provide pay-per-mile auto insurance, and who should obtain pay-per-mile insurance.

Read on to learn all about pay-per-mile auto insurance. Enter your ZIP code if you’re ready to begin comparing multiple insurance companies near you.

What is pay-per-mile auto insurance?

Pay-per-mile car insurance (also called pay-as-you-drive insurance or PAYD insurance) is a usage-based insurance program that issues monthly rates based on the number of miles you drive.

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How does pay-per-mile auto insurance work?

Car insurance companies track the miles you drive and your driving habits utilizing either telematics on your smartphone or a telematic beacon that you install in your vehicle.

Telematics is a fancy device that records your driving performance and the amount of miles that you drive. Auto insurance companies have recently traded Bluetooth beacons and OBD ports for mobile apps.

Today, most insurance companies use smartphone apps for pay-per-mile car insurance, but it’s not uncommon to see companies issue Bluetooth beacons in combination with mobile apps.

What are the best pay-per-mile auto insurance companies?

Some of the best car insurance companies provide pay-per-mile insurance. If you’re not sure where to look for pay-as-you-drive auto insurance, start with the best pay-per-mile car insurance companies:

  • Metromile
  • Root Insurance
  • Noblr
  • Hugo Insurance
  • Mile Auto
  • DriveSense (Esurance)
  • ByMile (Liberty Mutual)
  • SmartMiles (Nationwide)
  • Drive Safe & Save (State Farm)
  • Milewise (Allstate)

You can’t get pay-per-mile car insurance at GEICO because GEICO doesn’t have a PAYD insurance program. And you won’t find pay-per-mile car insurance at Progressive.

How much are pay-per-mile auto insurance rates?

Pay-per-mile car insurance fees vary per person. As the name suggests, your auto insurance rates are based on the miles you drive. But each company has different rates.

For example, Nationwide’s SmartMiles has a variable rate and a base rate. The base rate is approximately $60 per month, but the variable rate is $0.07 times the number of miles you drive.

If you drive 128 miles in one month, your monthly rates will be $60 plus $8.96. That’s a total of $69 per month.

Meanwhile, Metromile’s base rate is $29 per month, and its variable rate is $0.06.

You can save on pay-per-mile car insurance rates by driving less often. But you may be required to travel a specific number of miles per month depending on the company.

If you have a clean driving record or a vehicle with many safety features, you can save even more money.

How much are standard auto insurance rates?

Standard car insurance is your typical insurance policy. Also, standard auto insurance rates are more expensive in many cases for drivers who don’t drive that much throughout the month. Drivers who commute long distances to work could spend more on pay-per-mile programs.

Here’s what the average auto insurance rates look like at the top companies in America.

Average Monthly Auto Insurance Rates by Company
CompaniesAverage Monthly Auto Insurance Rates
American Family$224
Liberty Mutual$398
State Farm$235
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The best companies project car insurance rates that are hundreds of dollars more. But you can receive more reliable coverage with a standard insurance policy. One benefit for some drivers is knowing what their monthly rate will be for the life of the current policy renewal.

Who should buy pay-per-mile auto insurance?

Drivers who own two cars (one they drive frequently and one they use on weekends) may want to consider pay-per-mile car insurance. The vehicle that you don’t drive as often can utilize a PAYD insurance policy.

Also, people who work remotely may want to consider pay-per-mile auto insurance. If you drive less than the average person, PAYD car insurance is appropriate for you.

Why can’t I get pay-per-mile auto insurance quotes?

Affordable pay-per-mile auto insurance can help your finances. Unfortunately, pay-per-mile car insurance quotes aren’t available everywhere.

Some companies (even the largest insurance companies) don’t provide pay-per-mile auto insurance throughout the United States.

Therefore, you’ll need to shop around for affordable pay-per-mile car insurance in your area.

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Can you get collision and comprehensive auto insurance with pay-per-mile insurance?

Yes, you can. Some of the best insurance companies provide collision and comprehensive coverage when you purchase pay-per-mile car insurance.

However, your base rate may increase. If your estimated base rate and variable rate are close to standard auto insurance rates, you may want to switch to a traditional insurance policy.

Do pay-per-mile auto insurance programs track my driving habits?

Yes, they do. Pay-per-mile car insurance programs also monitor your driving performance. Auto insurance companies examine your driving behavior to determine your risk level.

People with poor driving habits will likely pay more per month for car insurance.

Pay-Per-Mile Auto Insurance: The Bottom Line

Pay-per-mile car insurance is ideal for drivers who either live close to work or work from home. Also, pay-per-mile auto insurance is good for drivers who have a vehicle that they rarely drive.

But PAYD insurance depends on how many miles you drive. If you drive the same amount of miles as you navigate with a standard policy, pay-per-mile insurance isn’t right for you.

Before you purchase pay-per-mile car insurance, use our free online quote tool to compare quotes from multiple insurance companies in your area.

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