How is cost calculated with pay per mileage programs?
How do pay per mile programs work? I don't drive as often as I used to and I'm interested in enrolling in a pay per mile program.
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Answered on Jul 07, 2021
Emily Maracle is a car insurance specialist living in New York. Originally from the Pacific Northwest, she has a degree in English Literature and a background in customer service. She enjoys cooking, gardening, and living sustainably. In the future, she can't wait to upgrade to a hybrid or electric car.
“A variety of car insurance companies offer pay per mile programs. They are all fairly similar in how they calculate mileage.
Most pay per mile programs have a base rate. This is the cost you will pay no matter what.
From there, you also have your variable rate. Your variable rate will be the cost you pay per mile x the miles you drive.
For example, your base rate may be $40 and your pay per mile rate could be 6 cents. If you drive 40 miles that month, your variable rate is $2.40 (.06x40). This would then be added to your base rate.
The total amount you’d pay that month would be $42.40 (2.40+$40).
Your base rate is still dependent on a variety of factors. You may have a higher or lower base rate depending on:
- your age
- driving record
- type of vehicle
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