Jessica Fox Last Updated On: June 27, 2023

Lower Your Rate When You Pay Insurance Per Mile

If you have a car that sits in the driveway most of the year, then pay per mile car insurance could be an incredible way to save you some serious cash. By allowing you to only pay for insurance when you use the car, you can save up to 40% a year on your insurance. 

Sounds great, right? So what’s the catch?

It’s this: you really have to be only driving occasionally. Providers who offer pay by the mile car insurance track your miles with telematics technology, so if you’re driving over your base rate, then you’ll be charged more.

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Table of Contents

Is Pay Per Mile Auto Insurance Right For You?

It could be! Do you:

  • Work from home?
  • Attend college or university?
  • Take public transit or carpool to work and other daily errands?
  • Have a second car you hardly use?
  • Are you retired?

If you said yes to one or more of these questions, then pay by mile car insurance may be a great option. The national driving average is around 12,000 miles per year. This means that if you only drive 6,000 miles, for instance, you could save hundreds of dollars on your car insurance annually.

How Pay Per Mile Car Insurance Works?

You probably get the gist of how this usage-based type of car insurance works, but let’s look further into its subtleties.

When you pay for your insurance by the mile, you are charged a base rate that is the same every month. This rate is determined in the same way that a traditional car insurance quote would be determined, using factors like your age, gender, where you live, your credit score, and driving record to inform the cost of the coverage.

Then, on top of this base rate, you also have a rate that applies per mile, meaning you are charged a set amount (example: $0.67 cents) per mile you drive.

As mentioned, many insurance providers use telematics devices to track your mileage.

If you’re not comfortable with using telematics technology, which plugs into your vehicle, some companies give you the option of sending in a picture of your odometer every month.

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Pay Per Mile Car Insurance vs. Pay-As-You-Go Car Insurance: What's the Difference?

Good question! The main difference between pay per mile car insurance and pay-as-you-go car insurance is that pay-as-you-go tracks not only your miles, but also your driving habits. The telematics technology can track how fast you break and your speed: vital information since people who break quickly and drive at higher speeds also have higher incidents of accidents. These people will obviously be harder to insure and may not qualify for these usage-based plans, which tend to favor lower-risk drivers.

How Much Money Does Pay Per Mile Insurance Save Me?

Pay by the mile car insurance can save you over $700 per year, with some drivers saving up to 40% annually.

These are notable savings, even compared to the low-mileage discounts you may receive on a traditional plan, which will only save you $35 per year on average.

Be aware, however, that your per-mile rate isn’t set in stone. When your policy renews, the rate can change—as all insurance rates can thanks to fluctuations in the insurance market.

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Is Pay Car Insurance Per Mile Worth It?

Yes, if you drive fewer than 10,000 miles per year, pay per mile auto insurance can be worth it. The ideal driver for this type of plan will drive less than 8,000, though most people who use these policies drive between 500 and 6000 miles per year.

It’s also worth noting that just because your insurance is billed by the mile, it doesn’t mean you cannot take a longer trip now and then. Many insurance companies stop counting miles for the day once a certain threshold is hit (250 miles per day in most states except New Jersey, where the meter stops at 150 miles).

Should You Switch to Pay Per Mile Car Insurance?

As we said, if you don’t drive much, then pay per mile auto insurance could be a great and cost-effective option. However, if you do drive frequently, you likely don’t want this kind of policy, in which case a traditional policy or a pay-as-you-go plan is worth investigating—provided you are a good driver with a good driving record.


Yes. Full coverage usually means you get collision, liability, and comprehensive insurance and you can get all of these with your pay-by-the-mile plan.

Yes, depending on the insurance provider. Some insurance companies provide multi-car discounts and others provide discounts for safe driving. Get a quote and then speak with an insurance agent to see what they will offer you.

It could be! The first thing you should do is get a comparison quote to see what providers will offer you. If you drive less than 10,000 miles annually, it’s definitely worth looking into this type of usage-based auto insurance.

That depends on the company. Some companies do offer extra benefits or optional add-ons to your plan. Pet insurance, for example, may be included in your plan and roadside assistance might be offered as an optional add-on. The only way to know for sure is to get a quote and see what’s available.

Nope! Your insurance provider will provide you with a device that plugs into your vehicle’s onboard diagnostics port (OBD-11). This port is located on your dashboard and all vehicles made since 1996 have them. You may be able to pair this device with your smartphone for added functionality.


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