What Is Pay-Per-Mile Insurance?
A telematic device or an app on your phone is used by usage-based auto insurance (UBI) programs to track your driving habits. The majority of car insurance tracking programs base your rate on factors such as mileage, in-car phone use, braking habits, speeding, and other behaviors that can either increase or decrease the likelihood of an accident. While each program is unique, these factors are common.
Other UBI programs are available, including those provided by insurers not rated by us. For instance, Liberty Mutual’s RightTrack program includes discounts of up to 30%. Similarly, Root Insurance claims that downloading and using a smartphone app that monitors driving data can help customers save up to $900 per year.
Even if a usage-based program tracks how far you drive, not all programs offer discounts for low mileage. Find out if your mileage is tracked and if it is included in your rate before signing up for a program. In addition, a discount is not always guaranteed, even though a UBI program may result in lower rates. Always check with your insurance provider to see if the data from your telemetric device could cause your rates to go up.
If you’re thinking about getting a UBI policy, doing some research and comparing different companies can help you find a program and insurer that meet your needs.
Auto coverage that is based on the number of miles you drive is called pay-per-mile insurance. Additionally, pay-per-mile plans typically include a base rate. The total cost varies depending on your age, driving record, and vehicle model. Full coverage, also known as collision, comprehensive, bodily injury, and property damage coverage, is typically included in pay-per-mile policies.
Additionally, many pay-per-mile automobile insurance plans have a daily mileage cap. You can still take road trips without worrying about having to pay a higher premium because everything after that is free.
While a number of insurers now offer coverage with usage-based options, fewer actually offer pay-per-mile insurance. Pay-per-mile plans are only available in certain states, so finding coverage may not always be straightforward. Only two of the insurers in our rating provide coverage for each mile: Nationwide and Allstate
Milewise by Allstate charges a daily rate that is adjusted every six months when the policy is renewed. In addition, drivers are required to pay a rate per mile, which is adjusted on a weekly basis in light of driving data from the four previous weeks. According to projections from Allstate, drivers who drive between 1,000 and 10,000 miles per year can save between 20% and 72% on coverage.
The SmartMiles policy offered by Nationwide is comparable to Allstate’s per-mile policy. Drivers pay a cost-per-miles rate based on mileage from the previous billing cycle in addition to their base premium each month. The average SmartMiles driver saves 25% compared to traditional policy rates, according to Nationwide. If SmartMiles drivers follow safe driving practices, they may also be eligible for a 10% discount.
Other insurers concentrate solely on pay-per-mile coverage. Mileage-based insurance coverage is offered by Metromile and Mile Auto. This type of coverage combines a base rate and a rate per mile, allowing drivers who drive less frequently to save money on auto insurance.
Be aware that only a few states offer these choices if you’re thinking about them. At the time of this writing, drivers in Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Washington, and Virginia are the only ones who can use Metromile. Only Arizona, California, Georgia, Illinois, Ohio, Oregon, and Texas offer Mile Auto coverage.