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If you’re trying to learn more about car insurance, you may have come across pay per mile insurance. This type of policy is different from standard auto insurance, which can make it kind of confusing to understand. Benzinga has put together this guide to help you weigh the pros and cons of paying your car insurance by the mile.
Best Pay Per Mile Car Insurance
- Best Overall Pay Per Mile Car Insurance: Root
- Best for Specializing in Pay Per Mile Policies: Metromile
- Best for Mobile App: Milewise from Allstate
- Best for Flexible Policies for Families: SmartMiles
How Does Pay Per Mile Insurance Work?
Standard auto insurance requires you to pay a flat premium for your insurance policy. The amount you pay is determined by a number of factors, including your driving record, your vehicle, where you live and more.
Pay per mile insurance works a bit differently. Like standard auto insurance, you’ll have a starting rate determined by the factors listed above, but the base rate for a pay per mile policy is typically much lower than a standard auto policy.
Here’s where things start to change. A pay per mile policy requires you to keep a device in your car. This device tracks how many miles you drive each month, and the number of miles you drive determines what you pay beyond your base rate each month.
So why do insurance companies offer a policy like this? Insurance companies profit when you pay premiums and don’t submit claims. You pose no risk of accident when you’re not driving, so pay per mile insurance offers a lower rate to align with your lower risk.
Should You Switch to Pay Per Mile?
Pay per mile insurance is not for everybody. Take a minute and think about how often you drive. Consider your commute to work or school, errands you run frequently and trips to visit family or friends. You can use an online maps tool to input addresses and figure out just how many miles you drive each month.
The national average in the United States is 12,000 miles per year. If you drive less than that, consider getting some quotes to see if the switch to pay per mile auto insurance will save you money.
Here are some situations when pay per mile may make sense:
- You walk or use public transportation to commute, but you have a car for longer trips. You use your car once a month on average.
- You work from home with no daily commute to worry about. Most days you don’t get into your car at all.
- You carpool with someone regularly.
- You have a second car only used at certain times of the year — like a convertible for the warm summer months.
Is Root Car Insurance Good?
Root has a very simple approach when it comes to car insurance. Their "download, drive and save" mantra is accurate, to say the least. How much you pay depends on you, your driving habits and how much you drive. Once you have the app, use it for a few weeks and then you'll get a quote from Root. This car insurance is as good as you are.
Car Insurance by the Mile Savings
Some auto insurance companies boast pay per mile insurance offers an average savings of around $500 per year, but it really depends how much you drive. If you underestimate the amount that you drive each year, you could sign up for pay per mile insurance and pay more.
You should also understand that unlike standard auto insurance, the amount you pay each month will vary. This could make it difficult to budget for your auto insurance payments each month.
Most companies that offer pay per mile insurance will charge you per mile for a maximum of 150 miles per day. This allows drivers to take the occasional long trip without worrying about just how many miles they’re going.
Best Pay Per Mile Car Insurance
If you’re looking for cheap car insurance, pay per mile could be the right move for you. Let’s take a look at some of the top companies that offer pay per mile auto insurance policies.
- Infrequent drivers
1. Best Overall: Root
Root is a relatively new company that relies heavily on its app and is often recommended for drivers with mishaps on their record. It offers a different approach to auto insurance with premiums based on your actual driving habits instead of demographic information.
Your auto insurance price is based on the information that Root gathers from the device you place in your car. The device will log your miles and driving habits, and you could save up to 54% on your policy. Roadside assistance and additional savings are available.
2. Best for Specializing in Pay Per Mile Policies: Metromile
If you’re all-in on a pay per mile policy, Metromile only sells pay per mile insurance policies. You’re eligible if you drive less than 10,000 miles per year, and the amount Metromile charges per mile also depends on the typical factors, such as your age, driving history and where you live.
You’ll have the same base rate each month, and Metromile offers roadside assistance as an optional add-on to your auto insurance policy. You may be eligible for further discounts if you’re a good driver.
- Pay-per-mile insurance from an established company
3. Best for Mobile App: Milewise from Allstate
Allstate offers its Milewise program for drivers who want to opt into pay per mile insurance, and its mobile app sets it apart from competitors. You can use the app to access your Milewise policy details, including the number of miles you’ve driven and your account balance.
It even allows you to set weekly spending goals, so it’s easier to factor a pay per mile policy into your budget. You can review your driving trends like braking suddenly or driving too fast. You’ll also have access to Allstate Car Health to help you view your vehicle diagnostics, find a mechanic and schedule repairs.
4. Best for Flexible Policies for Families: SmartMiles
SmartMiles is offered by Nationwide, and like other pay per mile policies, you pay a base rate and a per-mile rate. Nationwide is a great option for families with multiple cars because you can customize its products.
For example, you might have 2 people in your household who commute 60 miles per day and 1 college student who leaves a car at home each semester. Even though one car is rarely driven, you still need to keep an active auto insurance policy. Nationwide allows you to enroll that car in SmartMiles to keep it on the same policy as the cars you drive regularly.
What’s Next?
If you’re considering the switch to pay per mile auto insurance, the first thing you should do is get a quote. Make sure pay per mile is available in your area and understand your combined monthly cost of the base price and your price per mile. Compare your pay per mile quote with a standard auto insurance option to make sure a pay per mile policy will save you money.
Frequently Asked Questions
What is the average cost of car insurance?
The median cost of car insurance is $94 a month.
What are the most expensive states for car insurance?
The most costly are Louisiana, Michigan, New York and Rhode Island.
Related content: How to Claim Mileage on Taxes
About Ashley Hart
Ashley Hart is a personal finance writer passionate about helping people feel empowered to take control of their finances. She has more than eight years of writing experience, focused on insurance.