- What is pay-per-mile car insurance?
- Pay-per-mile car insurance cost calculator
- How to use the pay-per-mile calculator
- Pay-per-mile insurance calculator
- How do insurance companies calculate pay-per-mile cost?
- Companies that offer pay-per-mile insurance
- How accurate is the pay-per-mile calculator?
- How to save with pay-per-mile insurance
- Factors that affect pay-per-mile insurance costs
What is pay-per-mile car insurance?
Pay-per-mile car insurance is an auto insurance policy that charges a fixed monthly base rate plus a separate per-mile fee for every mile driven. Unlike a traditional policy with a fixed monthly premium, the total cost of a pay-per-mile policy changes each month based on how much you drive.
Pay-per-mile insurance is best suited for drivers who average fewer miles than the average driver, including remote workers, retirees, and drivers with a second vehicle used only occasionally.
Pay-per-mile insurance covers the same types of protection as a traditional policy, including liability, collision, and comprehensive coverageComprehensive coverage helps pay for damage to your car caused by events other than a collision, such as theft, fire, vandalism, or natural disasters. It is subject to a deductible..
Pay-per-mile car insurance cost calculator
The pay-per-mile calculator uses an estimated base rate provided by several pay-per-mile car insurance companies and an estimated per-mile rate. The combination gives the total monthly rate estimate.
Keep in mind that rates vary by insurance company. Additionally, your mileage rate will change based on how much you drive during the month.
Use the pay-per-mile calculator to estimate your base and mileage costs. Then, compare rates with a traditional policy to see which is right for you.
How to use the pay-per-mile calculator
To use the calculator, simply enter your average monthly miles and use the base rate and per-mile rate to see how much you would pay.
- Enter your estimated monthly base rate in dollars.
- Enter your per-mile rate in dollars.
- Enter your estimated monthly mileage.
The calculator combines your base rate and mileage charge to show your estimated monthly premium.
Note: Your actual miles driven vary each month, so your monthly premium will change accordingly.
Pay-per-mile insurance calculator
Base monthly rate
$25
Cost per mile
$0.05
Estimated monthly mileage
600How do insurance companies calculate pay-per-mile cost?
Insurers calculate pay-per-mile auto insurance by combining a fixed monthly base rate with a per-mile charge multiplied by your total miles driven that month. The base rate is set using personal factors, including your driving record, age, and vehicle. The per-mile rate is applied to every mile you drive, tracked via an app or plug-in device.
For example: a $35 base rate plus a $0.05 per-mile rate and 100 miles driven equals a $40 monthly premium. At 200 miles, the same policy costs $50.
Companies that offer pay-per-mile insurance
Several major national insurers offer pay-per-mile insurance in addition to traditional policies, including Allstate, Nationwide, USAA, and Mile Auto.
Some of these companies also offer straight per-mile insurance, while others may monitor other driving habits in addition to miles. USAA, for example, combines per-mile rates with factors like speed and braking habits.
Pay-per-mile coverage is now offered by established national insurers with long claims-handling records, reducing the risk concerns that applied when only startups offered the product. "With established insurers also offering this option, we're less worried about that," says Amy Bach, Executive Director of United Policyholders.
Here’s a list of companies currently offering some form of pay-per-mile insurance:
| Company | Availability | Notable feature |
|---|---|---|
| Allstate | Most states | Daily base rate plus per-mile rate |
| Nationwide | Most states | Base rate plus per-mile rate |
| USAA | Military members and families | Combines per-mile rate with driving behavior factors |
| Mile Auto | Select states | No plug-in device required; instead verifies mileage by odometer photo |
How accurate is the pay-per-mile calculator?
The pay-per-mile calculator provides an estimate of your monthly premium, not a guaranteed rate. Your actual cost will differ based on personal factors your insurer uses to set your base rate, including your driving record, age, and vehicle, and the exact miles you drive each month. Contact an insurer directly for a precise quote.
How to save with pay-per-mile insurance
Pay-per-mile insurance saves money when your monthly mileage is consistently low. Your base rate remains fixed regardless of mileage, so the savings come entirely from the per-mile component.
To get the cheapest pay-per-mile insurance rates:
- Drive fewer miles by consolidating errands and using alternatives for short trips.
- Maintain a clean driving record to reduce your base rate.
- Improve your credit score, which insurers use to calculate the base rate in most states.
The way you drive may also affect rates or discounts. Some insurers consider driving behaviors when monitoring your mileage. When and where you drive, hard accelerating, hard braking, and using your phone while driving may affect insurance rates.
Some pay-per-mile insurance companies allow drivers to self-report mileage rather than using a plug-in device or app. Insurers verify self-reported mileage using third-party data sources.
"These plans can be a good option for a consumer who doesn't drive much, but they need to know that you can self-report your mileage. Insurers are double-checking the accuracy of your reporting with mined data, including data from oil change businesses," says Bach.
Factors that affect pay-per-mile insurance costs
Pay-per-mile insurance costs are determined by two components: the miles you drive each month and a fixed monthly base rate calculated from personal rating factors. Those factors include your age, driving record, credit score, vehicle, location, marital status, and gender.
The base rate of your policy is calculated using traditional factors, such as:
- Age — Younger drivers lack experience and are more likely to be in an accident.
- Driving record — Traffic violations indicate a lack of attention and a higher chance of an accident.
- Credit score — Drivers with lower credit scores tend to file more claims and are less likely to pay for damages out of pocket.
- Vehicle — Expensive or luxury vehicles are more costly to repair, increasing insurance rates.
- Location—Drivers who live in high-crime or high-traffic areas pay higher rates because their vehicles are more likely to be stolen or damaged.
- Marital status — Married drivers are seen as more responsible and safer drivers.
- Gender — Statistically, male drivers have higher insurance rates since they are riskier drivers.
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