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The Best Pay-Per-Mile Car Insurance Companies
Wouldn’t it be nice to pay for a service only when you used it? That’s exactly what usage-based auto insurance is. Getting low mileage insurance lets you pay less by only paying for the miles you use. It’s the perfect way to cut costs without getting rid of coverage.
Choosing the right car insurance can be a challenge. We used our SimpleScore methodology to help you pick the best low-mileage car insurance providers across the country. Our team looked closely at coverage options, affordability, support and accessibility to help narrow down our top picks.
The best pay-per-mile car insurance companies
- Best Online Experience: Nationwide SmartMiles
- Most Affordable Low-Mile Insurance: Metromile
- Best for Daily Base Rate Structure: Allstate Milewise
- Best for Low-Mileage Tracking: Mile Auto
What is pay-per-mile car insurance?
Starting with a base rate that is calculated using factors such as your age, your credit score, your driving history, the kind of car you drive and your gender, insurance providers charge you a monthly premium that is a combination of your base rate and the total amount you drive.
To calculate the latter component, insurers use an in-car device that tracks the number of miles you log each month. These miles factor into your annual mileage, which ultimately becomes a factor — though not a major component — in your overall premium. Taking all of this into account, insurance providers come up with a premium that reflects your driving habits, which is what you end up paying each month. If you don’t drive at all, you pay the base rate. If you do venture out onto the open road, your monthly premium reflects your mileage and includes a daily mileage ceiling above which you won’t be charged.
[ Read More: The Best Home and Auto Insurance Bundles ]
Who should consider pay-per-mile insurance?
Pay-per-mile car insurance clearly isn’t for everyone. Apart from the aforementioned geographic restrictions that apply to some providers, the per-mile basis on which premiums are calculated makes pay-per-mile insurance an unattractive option for users that drive a lot.
For example, a sample rate from Metromile quotes its premiums at least $29 per month as a base rate plus six cents per mile driven. Taking into account the fact that the average American drives 16,550 miles per year, this policy would end up costing users about $1,341 per year, which is more than $300 over the national average of $1,004.
[ Next: The Simple Guide to Car Insurance ]
With this in mind, people who know that they have to log a lot of miles behind the wheel likely aren’t the best candidates for this kind of insurance. On the other hand, if you live in an urban area or have circumstances that don’t require you to use your car often, pay-per-mile insurance could be an excellent way to save money on monthly auto insurance premiums.
If you don’t drive often or fall under one of these categories you may want to look further into low mileage insurance:
- College student: You’re likely walking or biking around campus. And if you drive your car, you’re not going far very often. Why pay extra when you’re burning more calories than miles?
- Urban area resident: If you live in NYC or another densely populated metro area you likely have everything within a few steps or subway stops. Your car likely stays parked unless you’re commuting to work or taking a road trip out of the city.
- Remote employees: People working from home spend most of their days in their humble abode. Work is only a hop or skip from couch to their computer screen. There’s no need for keys unless you need to run a few errands.
- Retired adults: If you’re retired or living in assisted living, chances are everything you need is at your fingertips. Grocery stores, pharmacies and leisure activities are within a few miles. So, there’s no need to pay full price for a few stops in the neighborhood.
If I am working from home, should I switch to low mileage insurance?
The COVID-19 pandemic has forced many employees to work from home for safety and social distancing precautions. With many spending more time at home, it’s the perfect time to switch to low mileage insurance. A recent Slack study found that nearly 16 million U.S. workers are working remotely as of March 27, 2020. Slack noted that this number is probably much higher now as the pandemic continues.
Slack’s study mentioned that 66% of surveyed employees are working remotely due to COVID-19 concerns, while 27% were remote workers beforehand. Growing pandemic concerns have many working remotely indefinitely and relying on delivery services to avoid large crowds. Americans are spending more time at home and less time out and about, making now the perfect time to switch to low mileage auto insurance. Those savings can help with home expenses or be put away for a rainy day.
How much can you save with pay-per-mile insurance?
The main factor in determining how much you can save with car insurance by the mile is the number of miles driven. With Metromile, for example, if you stick to an average of 25 miles per day, you could end up paying just under $900 per year in auto insurance, which would yield you a modest chunk of change in savings compared to the national average.
To have a clearer idea of what you could save, however, your best bet is to solicit quotes from traditional auto insurance providers and pay-per-mile insurers and use your estimated annual mileage as a predictive marker in calculating how much each option might cost you.
How you can save money with low mileage insurance
Usage-based insurance coverage lets you pay as you drive. It’s simple — you only owe for the miles you drive. The coverage cost may vary depending on a number of factors including your city, vehicle and number of miles. You’ll also want to factor in other auto insurance coverage add-ons such as uninsured drivers, collision or roadside assistance.
Overall, it can mean big savings including low mileage premium reduction — the monthly or annual coverage price drop for having low mileage insurance. If you drive less than 8,000–10,000 miles per year you can benefit from low mileage insurance coverage savings. The Insurance Information Institute also shared that you can also get a price reduction if you carpool for extra savings.
We welcome your feedback on this article and would love to hear about your experience with the auto insurance companies we recommend. Contact us at firstname.lastname@example.org with comments or questions.