No one wants to pay more for car insurance than they have to. However, there are lots of drivers that don’t drive very often that pay much more than they need to. Pay-per-mile or pay-as-you-go car insurance is a new innovation that can help low mileage drivers save a fortune on their car insurance. This article will cover everything you need to know about pay-per-mile car insurance. We’ll help you understand what it is, how it works and look at some of the biggest companies offering it. Finally, we’ll talk about state-based restrictions and help you understand if pay-as-you-go car insurance is the best option for you.
While this product seems new, it’s actually an innovation on a long-standing car insurance practice. You’re asked how many miles you drive per year when you sign up for car insurance. Normally, the minimum level that any insurance company will allow you to up is about 12,000 miles. Insurance companies use this information to determine what kind of a risk you are to make a claim. The more you’re on the road, the greater your chances of needing to make an insurance claim.
Pay-per-mile car insurance takes this logic to the next level. Instead of paying for how much you might be on the road, you pay for how much you’re actually driving. The result is a cheaper insurance bill for many low-mileage and infrequent drivers.
How Does Pay-Per-Mile Car Insurance Work?
Pay-per-mile or pay-as-you-go car insurance takes advantage of technological innovations to work. Companies either use an app on your phone or a special device that plugs into your car to see how much you’re actually driving.
The insurance company will collect this information and use it to send you your bill. Many insurance companies also use this technology for good driver discounts. Pay as you go insurance companies can also offer some of these discounts. They can also use information collected from your driving to help determine your rate.
This means that you get a completely individualized rate. This can save you money because the way traditional insurance works is by using statistics. Companies use information about you to make guesses as to how you drive and what kind of risk you present to the company. These new technological innovations let insurance companies get precise information on you specifically instead of generalizing you. As a result, your rate reflects your exact risk. That means you pay less when you drive safely and don’t drive very often.
Understanding how these insurance products work is incredibly important. Knowing how they operate is the best way to help you decide if these products are right for you. Failure to understand how they operate can result in you paying even more for car insurance than you already are. We’ll go over the things you need to consider to decide if pay-per-mile or pay-as-you-go car insurance is the best auto insurance option for your needs.
Pay-Per-Mile Car Insurance Companies
This section looks at some of the different pay-per-mile and pay-as-you-go car insurance companies. Check our site for more complete reviews of each option. In this section we’ll tell you a bit about the company, how they track your miles, and any other important information. However, it’s important to keep in mind that this isn’t intended to be a complete review, so check back on our site for more information soon!
Metromile is one of the biggest names in pay-per-mile car insurance. They believe that how much you drive has a much bigger impact on your likelihood of filing a claim. That’s why more than 50% of your rate with Metromile is determined by how much you drive.
The way that Metromile works is simple. You’ll get a device to plug into your car, similar to Progressive’s Snapshot which was introduced in 2013. Metromile uses this information to see how much you’re driving and to set your rate.
The way the rate works at Metromile is that you get a base rate plus a rate per mile. The rate per mile is usually a few cents. For example, if you have a rate of $0.05 per mile, and then you drive 200 miles, you’ll be charged $10.
The base rate you pay stays the same every month. It averages $20 and up. The base rate is set by the same type of factors that traditional auto insurance companies use to determine your overall rate, such as driving history, age, car make and model, and so on.
One of the best things about this is that it’s always easy to determine what your insurance costs will be. You can use a simple formula: Base Rate + (Miles Driven X Per-Mile Rate) = Your insurance cost. That means you won’t be surprised when your bill comes. It also means you’ll have a greater ability to make financial planning decisions.
This pricing model is more transparent than many of the other pay-per-mile programs out there, which offer to charge you based on how much you drive, but don’t actually give you a price per mile rate for you to understand and use to manage your driving.
Allstate’s pay per mile program is called Milewise. It uses a very similar formula to Metromile. You get charged a base rate plus a per mile rate to determine your overall cost.
The Allstate Milewise program uses a device similar to Metormile and Progressive’s Snapshot program. You plug the device into your car and then get the Allstate mobile app. The device and app communicate information about your driving to Allstate, and the company uses that information to make decisions about your base rate when renewal comes up, as well as using it to process your monthly bill for car insurance.
Milewise isn’t available in all states yes. As of this writing, you can get the Milewise program in Washington, Oregon, Idaho, Arizona, Texas, Illinois, Indiana, Ohio, West Virginia, Virgina, Delaware, Maryland, and New Jersey.
One of the nice things about the Milewise program is that the app allows you to track your driving and your budget. That means you can easily access details about your account balance, miles driven, and your safe driving status. As a result, it’s easy to manage your budget and your driving while getting the most out of your car insurance.
Nationwide’s pay-per-mile program is known as Smartmiles. This program works in a similar fashion to the other programs we’ve reviewed. However, there’s one important difference. While you get a base rate and a rate per mile, the rate per mile is variable. That means the cost you pay per mile can change depending on what Nationwide thinks about your driving and your rate.
However, there are some benefits with the Nationwide program. For one, you can get a safe driving discount of up to 10% on your bill. You also get road trip exceptions on your rate. If you’re planning a long trip, then only the first 250 miles count on a single day.
The Road Trip Exception is a great option for people that work from home but have to occasionally travel long distances to complete projects or meet with clients. It gives you all of the advantages of other programs while offering some flexibility for when you occasionally need to make long trips. As a result, it keeps your costs down while keeping you covered.
What States Have Pay-Per-Mile Car Insurance?
Every state makes its own car insurance laws. That means that pay-as-you-go and pay-per-mile car insurance companies may not operate in every state yet. Moreover, even if there are pay-per-mile insurance plans in your state, your choices might be limited by what companies have decided they can do business in that state and gotten approval. That’s why one of the first things you should check is whether or not you live in a place where an insurance company does business. Doing so can save you a lot of time and energy in your search for the best price on car insurance.
As of this writing, you can for sure get pay-per-mile insurance in the following states:
- New Jersey
It’s important to keep in mind that insurance companies are opening new branches and expanding their services all the time. That means it’s still worth checking to see if you have any pay-per-mile-car insurance options where you live, even if your state doesn’t appear on this list.
Is Pay-Per-Mile Car Insurance Right For You?
Now that you understand what pay-per-mile car insurance is and how it works, you need to decide if it’s the best way for you to save money on car insurance. This section will outline the two basic questions you need to ask yourself to determine if pay-as-you-go is a great option for you. We’ll look at each of the two facets of this question and outline the information you need to know to make an informed decision.
How Many Miles Do You Drive?
The most important thing is understanding how many miles you drive per year. The best way to do this is to take your average miles per month and multiple it by 12 to get a final result. Remember that most standard car insurance assumes that you’re driving at least 12,000 miles per year. As a result, anything over 1,000 miles per month or 12,000 miles per year means that you’re probably going to get a better rate going with traditional car insurance instead of pay-per-mile car insurance.
For example, an average driver who does 5,000 miles per year will pay about $1,023 with Metromile, $1,245 with GEICO, and $1,955 per year with State Farm. That means pay-per-mile insurance will save you more than $200 per year if you’re going 5,000 miles each year.
However, if you drive 20,000 miles, the costs are a bit different. Metromile customers will pay about $2,342 per year, whereas GEICO customers will pay about $1,438 per year and State Farm customers will pay about $2,236 per year.
As a result, using pay-per-mile insurance and then driving frequently can cost you almost $1,000 per year extra on your car insurance. That’s not a small chunk of change and can make a huge impact on the quality of your daily life.
This example shows how important it is that you understand how pay-per-mile works and also understand exactly how much you drive. If you’re thinking about getting pay-per-mile insurance, then you should start tracking your driving immediately to see how much you drive and to determine if it’s worth your hard-earned dollars to switch.
How is Your Driving?
The other question you need to ask yourself is “how is my driving?” That’s because most pay-per-mile insurance companies will also offer good driver discounts. However, the flip side of that is that the insurance company will charge you more if you’re driving in a way that isn’t safe or increases the risk that you’ll need to file a claim. The company will also charge more if you drive in such a way that any claim filed will cost more than average for the insurance company.
You can get good driver discounts by doing things like obeying speed limits, giving yourself plenty of room to come to a slow, safe stop, avoiding driving between 12am and 5am, soft breaking, gentle turns, and other safe habits.
However, if you’re the kind of person that is frequently running late and scrambling to make up lost time, then you’re going to be doing things that make you a higher risk. That includes things like speeding, sudden breaking, fast turns, and other risky behaviors. If you frequently engage in these kind of habits while you drive, then you may want to reconsider pay-as-you-go car insurance and/or work on your driving so that you can get the benefits that come with being a safe driver.
General Pay Per Mile Questions
This section covers general questions about pay-per-mile car insurance.
What is pay per mile auto insurance?
Pay per mile auto insurance is just like regular insurance except you’re charged based on how much you drive in a month instead of getting a flat rate.
How does pay per mile insurance work?
Pay per mile insurance is simple. You get a base rate and a per mile rate. Your total cost is your base rate plus your number of miles times your per mile rate.
What is the average pay per mile that insurance gives?
There’s not a lot of information on the average pay per mile quote, as this product is still fairly new.
What is pay per mile?
Pay per mile is a type of car insurance that lets you pay based on how much you drive instead of paying a flat rate each month.
How much does pay per mile car insurance cost?
The cost for pay-per-mile insurance is your base rate + (number of miles X per mile rate).
What does pay per mile insurance cover?
Pay per mile insurance covers all of the same things as standard car insurance, the only difference is how your costs are calculated.
Specific Pay Per Mile Companies
We’ll answer popular questions about pay per mile insurance companies in this section.
Which companies offer pay per mile auto insurance?
Lots of companies offer some kind of pay per mile plan, depending where you live. Metromile, Allstate, Nationwide, and Esurance are popular options.
How does Allstate insurance pay per mile work?
Allstate gives you a device to plug into your car and you download the app. The device tells Allstate about your driving and they use that information to set your rate.
How does Metromile pay per mile insurance work?
Metromile pay per mile insurance works just like standard car insurance. However, you get a device to plug into your car that tracks your miles. Metromile uses that information to charge you a per-mile rate for insurance.
How does Nationwide insurance pay-per-mile work?
Nationwide will send you a device to plug into your car. The device tracks your driving a mileage. Nationwide uses this information to set your base rate and your per mile rate.
What companies have pay-per-mile insurance?
There are several companies that have pay-per-mile insurance. Nationwide, Allstate, Metromile, and Esurance are some of the most popular options.
When will State Farm offer pay-per-mile in Georgia?
State Farm hasn’t produced any information about when they plan to offer pay-per-mile in different states.
Does Metromile track speed?
The pulse device you get from Metromile does track speed, but it’s not clear if that information is reported to the company.
Does Geico offer pay-per-mile insurance?
Geico doesn’t offer a pay-per-mile insurance plan at this time.
How much does Metromile charge per mile?
Your per-mile rate at Metromile is determined based on a series of factors, so it’s hard to say what your rate will be without more information.
Who is Metromile owned by?
The company is owned by a group of investors. David Friedberg is the chair of the board and the CEO is Dan Preston.
Is Progressive Snapshot pay-per-mile?
No, Progressive Snapshot uses information about how you drive to allow Progressive to set an accurate rate for you.
Pay Per Mile in Different States
This section covers common questions about pay-per-mile insurance in different states.
Why is pay per mile insurance on offer in few states?
Every state has different insurance laws. That means that some laws might prevent pay-per-mile insurance companies from operating.
Who offers pay per mile insurance in Arizona?
Nationwide, Allstate, and Metormile all offer pay per mile insurance in Arizona.
How much premium pay per mile insurance California?
Your premium for pay-per-mile insurance in California depends on how much you drive plus things like your driving history and type of car.
Which states have pay per mile car insurance?
Lots of states have pay per mile insurance. Oregon, Washington, Idaho, Ohio, Maryland, Delaware, Arizona, Texas, and more have at least one pay-per mile company.
Who offers pay-per-mile insurance in Ohio?
Allstate and Nationwide both offer pay-per-mile insurance in the state of Ohio.
Why doesn’t my state have any pay-per-mile insurance companies?
Your state laws might have something in them that prevents pay-per-mile insurance from operating. You’ll need to investigate your state’s laws for more information.
Other Pay Per Mile Insurance Questions
We’ll cover pay per mile insurance questions that don’t fit into our standard categories in this section. Check here if you can’t find your question elsewhere.
How much is pay per mile insurance?
Pay-per-mile insurance costs different amounts depending on several factors, like what kind of car you drive, your driving history, and how much you drive each month.
Does pay-per-mile insurance save money?
Pay per mile insurance can save money, it depends on how much you drive. Enter your information at a pay-per-mile site to get a free quote.
How do pay-per-mile insurance companies track mileage?
Most pay-per-mile plans use a device plugged into your car to track how much you drive. The device might or might not communicate with your smartphone via an app.