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Don't Drive Your Car Much? Pay-Per-Mile Car Insurance Could Save You Big Money

CNET 9/20/2022 Peter Butler
The average driver pays $1,771 a year in car insurance for full coverage. alexsl/Getty Images © Provided by CNET The average driver pays $1,771 a year in car insurance for full coverage. alexsl/Getty Images

If you're looking to lower the cost of your auto insurance, and you don't drive your car much, you might consider switching to pay-per-mile or "pay as you go" car insurance. Instead of paying an exact amount each month for your auto insurance coverage, pay-per-mile insurance lets you pay a lower flat rate plus money for every mile that you drive.

© Provided by CNET

The concept of pay-per-mile car insurance has been around since at least 1968 and may help certain drivers save money. In 2008, the Brookings Institute found that pay-per-mile insurance would save society "$50 billion to $60 billion a year by reducing driving-related harms."

Not only could pay-per-mile car insurance cost you less money, it might also give you more control over how much you drive and spend on gas. There's also the benefit of knowing the exact cost of each mile you drive. According to Robert Lajdziak of J.D. Power, "even customers who are not saving money are still more satisfied with price due to having more transparency and a feeling of control over their premiums."

Learn how pay-per-mile car insurance works, which car insurance providers offer pay as you go coverage, how much money you might save and whether or not pay-per-mile car insurance could be a good option for you. For more, find our top picks for the cheapest car insurance.

What is pay-per-mile car insurance?

Pay-per-mile auto insurance charges you monthly based on how much you drive. Instead of paying a fixed premium for your car insurance, you'll pay a variable amount that fluctuates depending on how many miles you put on your car.

How does pay-per-mile car insurance work?

You'll pay your car insurance provider a standard base rate, plus a per-mile rate that's multiplied by the number of miles you drive each month.

To track mileage, most pay-per-mile car insurance providers require that you connect an electronic device to your car's onboard diagnostic (OBD) port. Also known as telematic devices, these machines can also track other driving behaviors such as driving speed, acceleration and braking distance. 

If you don't want your car insurance company to track your driving behaviors, some companies let you track your mileage via smartphone apps or odometer photos.

Who sells pay-per-mile car insurance?

Currently, four car insurance providers offer pay as you go insurance: Allstate, Metromile, Mile Auto and Nationwide.

Metromile and Mile Auto are both online-only insurance providers that only offer pay-per-mile car insurance. Allstate and Nationwide are larger, traditional insurance companies that sell many types of insurance, which enables further potential savings for bundling home, life or other insurance policies.

For military members and families, it's worth mentioning the "pay as you drive" car insurance program offered by USAA subsidiary Noblr. Its "usage-based insurance" (UBI) program will lower your bill when you drive less, but its algorithm for calculating your monthly premium is not tied exactly to your mileage, so it's not technically pay-per-mile insurance.

Who can get pay-per-mile car insurance?

Pay-as-you-go car insurance exists in most of the 50 US states, except Alaska, Hawaii, Louisiana, New York and North Carolina. Account requirements vary between insurance providers.

The widest coverage comes from Nationwide SmartMiles, which offers policies to all states except the five listed above. Smaller, online-only insurance companies only provide pay-per-mile car insurance to eight or nine states.

How much does pay-per mile car insurance cost?

Rates for pay-per-mile car insurance vary depending on a number of factors. Your personal monthly premium will depend on your age, your gender, your location, the type of car you drive, other drivers of the vehicle and your driving history -- particularly any recent speeding tickets, at-fault accidents or DUIs.

Compare the pay-per-mile car insurance providers and plans below to learn more about how they work and some estimated prices for common scenarios.

Note: All of the provided insurance quotes are only estimates of potential pay-per-mile car insurance costs. Final costs of actual insurance policies may vary considerably from these estimates.

The car insurance quotes below are based on my own personal driving situation -- two drivers about 50 years old with clean records living in Berkeley, California, with one car -- a 2008 Subaru Outback. My standard quote was for $15,000 per person ($30,000 per incident) bodily injury coverage, $5,000 in property damage, $15,000 per person ($30,000 per incident) for injuries from uninsured or underinsured motorists, and comprehensive and collision coverage with $500 deductibles for each.


Founded in California in 2011, Metromile was one of the first providers of pay-per-mile car insurance. To track mileage, Metromile uses a device called the Pulse that connects via your OBD port.

Metromile © Provided by CNET Metromile

Metromile has a fairly small footprint so far, providing insurance policies in eight states -- Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia and Washington.

With Metromile, you're charged for each mile that you drive up to 250 a day (150 a day for New Jersey). Metromile claims its customers "save 47% on average compared to what they were paying their previous auto insurer." 

Based on my location and driving situation, Metromile's online system quoted me a base rate of $33 a month plus 6 cents per mile. At a driving rate of 500 miles per month, or 6,000 miles a year, I'd pay $63 for car insurance each month, or $756 per year. That's for the fairly standard insurance coverage mentioned above.

At a lower level of coverage, with no collision, comprehensive, or uninsured motorist coverage, Metromile quoted me $20 per month base rate and 3 cents per mile. Driving 500 miles a month, I'd pay $35 a month or $420 per year.

Metromile was acquired by insurance company Lemonade in Nov. 2021. It's unclear yet if or how Metromile will combine with Lemonade's homeowners, renters and pet insurance products. 

Mile Auto

Mile Auto -- or simply Mile, as the company calls itself -- is unique in the pay-per-mile insurance space because it doesn't make you install anything that tracks your car's usage and your driving behavior. 

Mile Auto © Provided by CNET Mile Auto

Instead, Mile uses a smartphone app that lets you submit pictures of your car's odometer. Called MVerity, the app sends you a monthly reminder with a link that opens your phone camera. Snap your odometer, upload your pic and MVerity does the rest. It detects your odometer data by confirming your vehicle and the photo's authenticity, and then comparing your picture to previous odometer readings.

Also unique to Mile Auto is the lack of a daily mileage cap. You'll pay for all your miles driven, even on long trips. Mile Auto is available in nine states -- Arizona, California, Georgia, Illinois, Ohio, Oregon, Pennsylvania, Tennessee and Texas.

Based on a quote for location and driving situation, Mile Auto estimated a base rate of $38.03 per month and a per mile charge of 4.2 cents per mile, for the same standard collision, comprehensive and uninsured motorist coverage parameters I used for Metromile. At 500 miles a month, that would also cost me about $59 a month or $708 per year. 

However, at a minimum coverage (using the same minimal personal injury coverage as Metromile), Mile Auto didn't offer me any savings. It quoted me a base rate of $34.68 and a per-mile rate of 4.9 cents. At 500 miles a month, I'd still pay $59 a month, or $708 per year. Mile Auto has not yet responded to requests for comment. 

Nationwide SmartMiles

Like Metromile, Nationwide SmartMiles works by plugging a small device that tracks your mileage and driving behavior into your car's OBD port. Also like most of the other programs, SmartMiles caps your maximum daily mileage at 250.

Nationwide © Provided by CNET Nationwide

Nationwide SmartMiles is available in 45 states and Washington, DC -- every state except Alaska, Hawaii, Louisiana, New York and North Carolina. (A Nationwide representative assured me that SmartMiles is available in Oklahoma, although its website says the state is excluded.)

This program doesn't provide an easy online quote system -- you can get a quote for traditional car insurance, but nothing that explicitly gives a monthly base rate or per-mile cost. 

After a few minutes with a Nationwide representative, I was able to get a quote for coverage similar to the common insurance scenario described above for Metromile and Mile Auto. 

Nationwide estimated that I would pay about $65 a month with my 500-mile estimate. The representative said that the per-mile rate would be 5 cents, making the monthly base rate $40. Remember, that's for $15,000/$30,000 basic bodily injury liability coverage, $500 deductibles for collision and comprehensive coverage, $5,000 property damage and $15,000/$30,000 for uninsured motorist coverage. 

Allstate Milewise

Milewise is one of Allstate's two telematics programs -- the other is Drivewise, a traditional insurance policy that provides safe-driving discounts for those willing to install a monitoring device to their cars' OBD ports.

Allstate © Provided by CNET Allstate

Allstate Milewise is available in 21 states -- Arizona, Delaware, Florida, Idaho, Illinois, Indiana, Maryland, Massachusetts, Minnesota, Missouri, New Jersey, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Texas, Virginia, Washington, West Virginia and Wisconsin -- as well as Washington, DC.

Drivers in most states are capped at 250 maximum miles per day, though it's capped at 150 miles in Illinois, Indiana, New Jersey, Ohio and Oregon.

Allstate Milewise isn't available in California, so I wasn't able to get an actual quote for my specific driver situation. An Allstate representative told me that, "with Milewise, low-mileage drivers can typically save 50% over traditional insurance policies."

Because rates vary so much based on individual drivers and the amount of insurance coverage provided, I recommend taking the time to complete the online quote tools or call the companies to get pay-per-mile insurance quotes based on your own specific driving situation.

For additional reading, check out our best cheap car insurance companies and seven more ways to save money on car insurance.

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