Is Pay-As-You-Go Car Insurance Worth It?

Pay-as-you-go insurance rates vary each month depending on how many miles you drive, so this type of car insurance may be worth it for infrequent drivers.
Written by Jason Unrau
Reviewed by Carrie Adkins
With pay-as-you-go or pay-per-mile car insurance, the number of miles you drive is the most influential portion of your rate. You’ll start with a base insurance rate and then pay per mile you drive in a given month—so your
car insurance
premium varies from month to month.
  • A pay-as-you-go or pay-per-mile car insurance policy starts with a base rate and adds a per-mile rate—so the less you drive, the less you pay.
  • Pay-as-you-go insurance tends to be best for people who work from home, have short commutes, or otherwise don’t spend much time on the road.
  • Allstate, Nationwide, Metromile, and Mile Auto all offer pay-per-mile policies.

What is pay-as-you-go car insurance?

Also known as pay-per-mile car insurance, pay-as-you-go car insurance is just like a traditional auto insurance policy—except your premium cost varies from month to month. 
A pay-per-mile rate is largely influenced by the number of miles you drive every day or every month, so your rate will fluctuate to reflect your monthly mileage totals.
Some pay-as-you-go insurance companies may factor other driving data into your rate, such as speed or time of day, by asking you to download a mobile app or install a plug-in device in your car that will track your driving habits.
Need to know: Not every insurance provider offers this type of policy, and it’s not available in every state.

Pay-as-you-go car insurance can be cheaper than a traditional policy—but your rate will change every month

Typically, the fee structure for a pay-per-mile insurance policy starts with a base rate (daily or monthly) and adds on a per-mile rate (daily or monthly). 
Just like a traditional auto insurance policy, these initial rates are determined using factors such as your:
  • Zip code
  • Driving record
  • Credit history
  • Vehicle type
  • Age
  • Prior insurance history
Once those initial rates are set, your total monthly bill will depend on how many miles you drove.
Here’s an example: 
  • Base rate (monthly): $30
  • Per-mile rate (monthly): $0.08/mile
  • Miles driven in one month: 400 miles
  • Total monthly rate: $62
If you tend to be a low-mileage driver, this type of fee structure could be less expensive than a standard insurance policy—but your premium will vary from month to month.

Best pay-as you-go car insurance companies

Although the best pay-as-you-go car insurance provider for you will vary depending on your driving history, location, and personal preferences, here are our top picks:
Insurance provider
Available in these states
How it works
Arizona, Delaware, Florida, Idaho, Illinois, Indiana, Maryland, Massachusetts, Minnesota, Missouri, New Jersey, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Texas, Virginia, Washington, Wisconsin, West Virginia
Allstate Milewise tracks your mileage using a plug-in device in your car. 
Pay-per-mile: daily base rate + per-mile rateUnlimited: daily rate only
Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia, Washington
Metromile tracks your mileage using a plug-in device in your car
Monthly base rate + per-mile rate
Arizona, California, Georgia, Illinois, Ohio, Oregon, Pennsylvania, Tennessee, Texas
You send a photo of your odometer to Mile Auto every month.
Monthly base rate + per-mile rate
All states except for Alaska, Hawaii, Louisiana, New York, North Carolina, and Oklahoma 
Nationwide SmartMiles tracks your mileage using a plug-in device in your car. Certain Ford and Lincoln connected cars can track your mileage without the device.
Monthly base rate + per-mile rate

Pay-as-you-go insurance may be worth it for low-mileage drivers

Pay-as-you-go is a great solution for drivers who need a car but don’t spend a lot of time on the road, such as:
  • Remote workers
  • Stay-at-home parents
  • People with short daily commutes
  • People with second cars they rarely drive
  • College students living on or near campus
Drivers who have long commutes, drive late at night, or have a lending loss should stick with traditional insurance plans that weigh other risk factors stronger than annual mileage to help keep their costs down.
To find out if pay-per-mile insurance could save you money: Record your mileage over the course of a typical week or month and use this number to get a quote from a pay-as-you-go insurance company. From there, calculate how much your monthly bill would cost and compare it to your current premium.
Here are some other things to consider before purchasing pay-as-you-go car insurance:
Lower insurance premiums for infrequent drivers
Your premium changes month to month, making your banking a little less straightforward
Can be helpful for multi-car owners
Can be complicated for vehicles with multiple drivers
Useful for drivers who spend a lot of time in traffic without traveling very far
A change in driving habits or commute time could increase your insurance costs
Same insurance coverage as a traditional auto policy
Not available in every state
Some drivers may be concerned about data tracking and privacy

Pay-per-mile insurance vs. usage-based car insurance discounts

Pay-per-mile insurance programs aren’t right for everyone, but there are other ways to save money based on your driving habits:
Usage-based discount type
How it works
Provider/program examples
Might be better for you if…
Telematics program discount
Telematics programs
use a mobile app or plug-in device to track your mileage, speed, braking, acceleration, phone use, and other driving behaviors. You’ll typically earn a small discount just for enrolling in the program, plus an additional discount at your next policy renewal date if you demonstrated safe driving habits throughout your last policy period.
You’re a pretty safe driver
You want to avoid daily/monthly mileage limits
Pay-per-mile insurance isn’t available in your state 
Low-mileage discount
Many insurance companies already take your estimated annual mileage into account when setting your insurance rate, but some providers offer an additional discount if your annual mileage is below a certain threshold.
You don’t want an app or plug-in device to track your driving (keep in mind that Mile Auto doesn’t require this for pay-per-mile insurance)
Your total annual mileage is low, but there are stretches of time when you drive a lot 

Other ways to find cheap car insurance rates

If you prefer steadier insurance, there are countless companies to choose from. 
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