D. Gilson is a writer and author of essays, poetry, and scholarship that explore the relationship between popular culture, literature, sexuality, and memoir. His latest book is Jesus Freak, with Will Stockton, part of Bloomsbury’s 33 1/3 Series. His other books include I Will Say This Exactly One Time and Crush. His first chapbook, Catch & Release, won the 2012 Robin Becker Prize from Seve...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has appeared on legaladvice.com, themanifest.com, and vice.com.

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Reviewed by Jeffrey Johnson
Insurance Lawyer

UPDATED: Mar 3, 2021

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Just the Basics

  • Many major companies offer pay-per-mile insurance
  • Drivers who rarely use their cars can benefit from this type of insurance
  • Telematics devices are used to determine your mileage and charge you accordingly

Pay-per-mile insurance is great for certain drivers. Everyone wants to know how to reduce the cost of auto insurance, and only paying for the miles you drive can be a great way to lower rates.

If you are looking for affordable pay-per-mile auto insurance, be sure to shop around and compare quotes. Each company will have a different program so you will want to look carefully at what multiple companies can offer you.

Enter your ZIP code now to compare pay-per-mile car insurance rates from top companies in your area.

What is pay-per-mile car insurance?

Pay-per-mile insurance is just like it sounds. You literally pay for each mile that you drive.

First, you are usually charged a small base rate each month. This rate is figured from the usual factors that affect the price of car insurance, such as age, driving record, and ZIP code.

Second, your mileage is calculated and charged at a low rate. You pay the combined rate.

The advantage of this type of insurance is that you control your rates. If you drive very little, this can be less expensive than your typical car insurance rates.

Pay-per-mile insurance should not be confused with pay-as-you-drive insurance.

The major difference is that with pay-as-you-drive insurance, your rates are based on how you drive. Hard braking, speeding, distracted driving, and the time of day you drive are all used to calculate your rates or discounts.

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Who should use pay-per-mile car insurance?

Pay-per-mile insurance is a great option for drivers who aren’t putting much mileage on their vehicles.

Stay-at-home parents, people who work from home, and people who live near public transportation are great candidates for usage-based insurance.

However, if you commute to work every day or drive around for pleasure, this type of insurance may not be the right fit for you.

Also if you have a strict budget, pay-per-mile insurance might not work for you since each month’s charge will be different.

How does pay-per-mile car insurance work?

According to the Insurance Information Institute, nine out of 10 of the major car insurance companies offers some sort of usage-based insurance. This makes it relatively easy to find a program, but keep in mind each one is different.

For example, auto insurance companies offering pay-per-mile insurance coverage have different methods of tracking your mileage.

Most companies use some sort of telematics device to count miles. This is usually a plug-in device or a tab that mounts on your windshield. These devices are then coupled with an app that runs on your phone.

For example, Allstate’s pay-per-mile program is Milewise. It uses a plug-in device to record your mileage and then adds that to your daily rate. You still receive the same auto insurance coverage as with a normal policy, your cost is just different.

Another thing to be aware of is that pay-per-mile programs like Milewise aren’t available everywhere. You will need to check to see if usage-based insurance is offered in your state.

Before you buy pay-per-mile car insurance, shop around to see if it’s the best option. Compare quotes with standard car insurance rates to see what is the cheaper insurance option for you.

Enter your ZIP code now to compare pay-per-mile car insurance quotes and find the best deal for you.