Wouldn’t it be great if we could cut down one of our most expensive bills by paying only for what we use? Some car insurance companies say they want to do exactly that with pay-per-mile auto insurance. Low-mileage drivers could save with pay-per-mile car insurance, but it can be hard to understand what that means. You might ask: If I drive every day, am I a low-mileage driver? Alternatively, how low is low?
We have the answers. Consider this guide if you’ve ever wondered about pay-per-mile car insurance or how you can keep car insurance costs low.
What is pay-per-mile auto insurance?
Pay-per-mile car insurance is insurance based on how far you drive. Instead of paying a flat rate that doesn’t change like with other insurance companies, your actual driving determines your car insurance premiums.
While different companies might offer pay-per-mile car insurance, sometimes called “pay as you go” car insurance or “pay as you drive” car insurance, Metromile is a leading pay-per-mile car insurance company in the U.S. The company started to create a new type of insurance personalized to each driver and their unique lifestyle.
How much does pay-per-mile car insurance cost?
After you get started with pay-per-mile car insurance, you’ll notice your bill includes two parts: a low monthly base rate and a per-mile rate.
The monthly base rate helps keep your car covered, even when you’re not driving. You can think of the monthly base rate like the fee your cell phone provider might charge you to keep your telephone number and line open.
The per-mile rate counts how far you drive. The rate doesn’t consider how long you are in your car, so you won’t ever get penalized if you’re stuck in bumper-to-bumper traffic.
For example, if your base rate is $29 per month and your per-mile rate is 6 cents per mile, your bill would be just $56 if you drove 450 miles that month.
As an added value, pay-per-mile car insurance often comes with a daily cap. Your miles are free after you drive 250 miles (150 in New Jersey) in a single day. The bonus lets you avoid any surprises on your bill and can help prevent stress. There’s no worry of “going over” with pay-per-mile car insurance.
How are pay-per-mile car insurance rates determined?
Unlike traditional insurance, pay-per-mile car insurance rates focus on someone’s actual driving.
Driving behavior, including how many miles someone drives, and the coverage selected, are the main factors Metromile considers. Other factors include the vehicle and type of insurance policy. Depending on the state, Metromile also considers how long someone’s had insurance before, claims history, and other information.
In contrast, traditional insurance rates may weigh more heavily on a driver’s age, gender, marital status, credit score, ZIP Code, or driving records, depending on the company, policy, and state. Often, insurance companies rely on these factors to determine the risk of large groups of drivers and might not personalize rates on a more individualized basis. Instead, Metromile uses technology and observed driving to help price rates down to the mile for each driver.
How much can you save with pay-per-mile auto insurance?
The savings can add up with pay-per-mile car insurance if you don’t drive much. Drivers saved $741 a year on average when they switch to Metromile, according to a recent survey of new customers who saved.
But drivers can save even more if they drive less.
Metromile also offers customers additional discounts to drivers who insure multiple cars on the same policy or install an anti-theft device or other equipment to make their vehicles safer. Drivers could also benefit from lower rates for their safe driving.
Who should get pay-per-mile car insurance?
Most Americans could find value by switching to pay-per-mile auto insurance. According to the U.S. Department of Transportation, Americans drive about 13,500 miles a year on average. Now, with more and more people working from home and taking fewer personal trips, chances are you are using your car even less.
If you drive 37 miles or fewer per day, you could save money on your premiums with pay-per-mile car insurance.
Drivers who could benefit from pay-per-mile car insurance include:
- People who work from home
- People who take public transportation
- College students
- More mature and senior drivers
- Mothers, caregivers, and people who live in the suburbs
- People who share their cars online
Even if you commute regularly or spend a lot of time in your car, you could save. Pay-per-mile car insurance doesn’t charge you for how long you drive because it focuses on miles driven.
How does pay-per-mile auto insurance work?
With pay-per-mile car insurance, your driving determines how much you pay for car insurance each month. This can give you more control over your costs, especially helpful if you keep a close eye on your car budget.
Metromile provides drivers with the Metromile Pulse device, a small wireless device that connects you to your car. The device accurately and securely counts the miles you drive to help bill you every month.
Installation is easy and can take minutes because the device plugs into your vehicle’s onboard diagnostic port, generally next to the driver’s side door, beneath the steering wheel, or around the center console. The onboard diagnostic port is the same connection your mechanic might use to check your car’s health in the garage.
The Pulse device needs to stay connected to your vehicle at all times, and Metromile customers are glad they do. The device helps power some smart-driving features. You can find your car’s location, know when street sweeping is happening in select cities, check your miles, review your trips, and more.
Some connected vehicle owners may not need a Pulse device or other additional equipment. Soon, owners of eligible Ford vehicles with built-in connectivity can opt in and connect their vehicle so that Metromile can count any miles driven directly from the vehicle’s odometer.
What type of coverage does pay-per-mile car insurance provide?
Metromile lets you personalize your auto insurance policy to your lifestyle and needs.
Metromile offers four different levels of liability protection and choices for your comprehensive and collision deductibles.
And your car will be covered, even when you’re not paying your per-mile rate. For example, when your car is parked, Metromile will cover your vehicle with comprehensive coverage when relevant.
How do claims work with pay-per-mile auto insurance?
Pay-per-mile car insurance provides the same types of coverage as other insurance companies. Licensed insurance specialists are available, and you can file a claim 24/7, online through the mobile app or Metromile website or by calling.
Drivers can also add roadside assistance to cover lockouts, flat tires, and towing, and an allowance for rental car reimbursements, to their policy.
Metromile also has a direct repair program, which can help expedite claims by making repairs more seamless. For example, Metromile customers can get notified of updates for their repair, changes to pricing, or service delays when they work with a participating repair shop. Metromile customers can use the Metromile app or log into their online account to find a nearby participating repair shop or see if their favorite garage is on the list.
The bottom line
Don’t be fooled: For many drivers, pay-per-mile car insurance can provide the same coverage as other insurance companies at a lower cost.
You don’t need to sacrifice your driving experience with pay-per-mile auto insurance, especially if you don’t drive much or are driving less than you have previously.