What Is Pay-Per-Mile Car Insurance?

Don't drive often? You could save a ton of money by switching to pay-per-mile auto insurance. Learn how it works and which companies offer it here.
Person driving car in nice day

Does your car spend a lot of time in the garage? If your car gets little action, it may be a smart move to switch to pay-per-mile car insurance. For people who drive less, paying by the mile for coverage can be a great alternative to a normal policy.

Pay-per-mile car insurance is as simple as it sounds. Once you sign up, you’re only charged for how far you drive, plus a monthly or daily rate (which is meant to be much smaller than normal rates). For many people, billing based on mileage is a fantastic way to save money. However, if your car is on the road a lot, it may not be the best choice.

In this article, we’ll take a look at how usage-based coverage works. You’ll also learn about who this type of policy is ideal for. And, of course, we’ll list the companies you can get a pay-per-mile insurance policy from, as well as which states allow it.

How Pay-Per-Mile Car Insurance Works

Pay-per-mile insurance is a type of policy that charges you for how much you drive. Insurers charge you a monthly or daily rate, plus a small charge per mile. For example, let’s say your carrier charges you $30/month and $0.06/mile. If you drove 800 miles in one month, you’d owe $78/month, $48 for the mileage, and $30 for the flat rate.

According to Metromile, a leading usage-based insurer, you’ll maximize your savings if you drive 10,000 miles or less annually. Any more than that, and it would cost more thana traditional auto insurance policy.

Some insurance companies may also collect data about your driving habits as part of their programs. This data is often to help providers give you discounts for safe driving or low mileage. However, some auto insurers may raise your rates for poor driving habits.

How Insurers Collect Mileage Data

To charge customers by distance rather than time, your insurer must track your mileage via “telematics.” In this case, telematics refers to vehicle tracking systems. Providers use this technology to track your mileage and other driving habits, such as accelerations, stops, and speed.

When you sign-up for a usage-based program, you’ll need to either install a device in your car or download an app to your phone.

Who Needs It

Pay-per-mile car insurance is great for anyone who drives less than 10,000 miles per year. This typically includes people who:

  • Work remotely
  • Have a short commute
  • Are retired and rarely drive
  • Attend college
  • Have an extra car that hardly gets driven

Who Shouldn’t Have It

While switching to a pay-by-mile plan can save people lots of money, it’s not for everyone. If you drive more than 10,000 miles per year, you might want to rethink switching from a traditional policy.

Is It Cheaper Than a Regular Policy?

Depending on how much you drive, pay-per-mile auto insurance can be cheaper than a regular policy. As we’ve mentioned throughout the article, those who drive less than 10,000 miles per year will likely see the most savings.

Ultimately, paying for mileage is only worth it for those who don’t drive much. If you find yourself driving frequently, you’re better off with a traditional policy. The best way to know if switching to pay-by-mile is worth it is to get quotes from an insurance provider and weigh the costs.

Normal Rate Factors Still Apply

Even though you’re charged for how far you drive, your premium is till subject to normal rate factors. Rate factors include details about you that indicate your risk, such as your driving record or age. Here’s a list of major rate factors insurers may use to calculate your rates:

Note that the factors above impact your flat and per-mile rates. Then, your final monthly premium is tallied based on how much you drive.

Insurance Companies With Pay-Per-Mile Plans

At this time, you only have a few options if you want to switch to a usage-based plan. Each insurer runs its program in a similar way, but there are key differences. Here’s a list of the companies that offer pay-per-mile insurance and a breakdown of how each program works:


Allstate offers usage-based policies through Milewise. Customers incur a daily cost, which is comprised of a flat and per-mile rate. To use Milewise, you must install a device in your car’s OBD port. Then, you can download Allstate’s iOS or Android app to monitor driving habits and costs.

Milewise has two classifications for a car, depending on usage: Pay-Per-Mile and Unlimited. Here’s the difference between the two:

  • Pay-Per-Mile. This is for low-mileage vehicles. You’re charged a daily rate and a per-mile rate.
  • Unlimited. Ideal for higher mileage cars. Allstate only charges you a daily rate, letting you drive as much as you want.

Note: Milewise is only available in AZ, D.C., DE, FL, ID, IL, IN, MA, MD, NJ, OH, OK, OR, PA, TX, VA, WA, WI, and WV.


Metromile is a well-known pay-per-mile provider. To track your usage data, you’ll need to install a device in your car. After that, you’re charged a monthly base rate plus a per-mile rate. You can also download an app to view your mileage, costs, and other driving-related info.

Note: Metromile is only available in AZ, CA, IL, NJ, OR, PA, VA, and WA.

Mile Auto

Unlike other usage-based insurers, Mile Auto doesn’t require you to install a device in your car. All you need to do is sign up, then you’ll send a monthly photo of your odometer. Then, they’ll bill you for the miles you drive, plus a monthly base rate.

Note: Mile Auto is only available in AZ, CA, GA, IL, OH, OR, PA, TN, and TX.


SmartMiles by Nationwide is another great option if you don’t drive very much. Your monthly costs are made up of a base rate and a cost-per-mile rate. Nationwide requires you to install a device in your car to track your driving habits and mileage.

In addition to only paying for the miles you drive, SmartMiles also gives you the following perks:

  • 10% safe driving discount
  • Road trip exception – only the first 250 miles count toward your rates
  • Access to a mobile app to track your mileage and driving behavior

Note: Nationwide’s SmartMiles is not available in AK, HI, LA, NC, NY, and OK.

USAA (Noblr)

USAA’s Pay as You Drive by Noblr is another usage-based insurance option that’s exclusive to military families. Each month, you’re assessed a base and per-mile rate . You’ll need to install a mobile app on your phone to get started, which will collect your mileage data.

Your mileage isn’t all the USAA app will track. It also tracks your driving habits. Good habits will lower your rates, while poor ones will raise them. The following will also determine your rates:

  • How hard you brake or accelerate
  • What time of day you drive
  • Whether you drive on the highway or city streets
  • Whether you use your phone while driving

Note: This program is only available in AZ, CO, IL, IN, LA, MD, MO, NM, OH, PA, TX, VA, and WI.

Pay-Per-Mile Car Insurance Programs

As we mentioned above, there are some key differences between each insurance company’s pay-per-mile program. This includes crucial factors, such as tracking method and how your rates are determined. Below is a table to help you compare each insurer’s usage-based plan head-to-head:

Insurance CompanyType of TrackingRate Formula
Allstate DrivewiseDevice installationDaily rate + per-mile rate
MetromileDevice installationMonthly rate + per-mile rate
Mile AutoPicture of your vehicle’s odometerMonthly rate + per-mile rate
Nationwide SmartMilesDevice installationMonthly rate + per-mile rate
USAA Pay as You Drive (Noblr)Mobile applicationMonthly rate + per-mile rate
Note: table data is from each of the above insurers’ websites.

Frequently Asked Questions

Is pay-per-mile insurance worth it?

If you drive less than 10,000 miles per year, it may be worth it. Of course, how much you can save depends on your situation. You may already be getting a good deal with your current insurer as is. If you’re interested in switching to a pay-per-mile car insurance plan, you should compare quotes to assess the market.

Do usage-based plans offer the same coverage as a regular policy?

Yes, usage-based auto insurance is available as a traditional policy. However, the plans differ significantly from one company to another. Metromile, a popular pay-per-mile provider, offers full coverage, as well as other types, such as roadside assistance and glass repair.

Is pay-per-mile coverage available in every state?

No, pay-per-mile isn’t available in every state. Availability varies based on which carrier you have. Some insurers, such as Metromile and Mile Auto, only offer coverage in a handful of states. On the other hand, Nationwide and Allstate allow people in many states to get usage-based insurance.

Is a low-mileage discount the same as usage-based plans?

No, usage-based insurance refers to a specific type of policy where you pay for the miles you drive, plus a flat rate. Low-mileage discounts mark down your premium because you’ve been driving less.

Which company has the best pay-per-mile program?

You only have a few options if a mileage-based insurance policy appeals to you. The best one for you depends on your situation and preferences. However, our research found that Allstate is the best telematics program, including pay-per-mile. Both Drivewise and Milewise, the company’s flagship usage-based insurance plans, come with plenty of perks and are great for helping you save money.


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