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 car insurance?
- How does pay per mile insurance work?
- Is pay per mile car insurance worth it?
- How much does pay per mile car insurance cost?
- How are pay per mile car insurance rates determined?
- Who should get pay-per-mile car insurance?
- What type of coverage does pay per mile auto insurance provide?
- How do claims work with pay per mile auto insurance?
- What is the difference between pay per mile and pay as you go insurance?
What is pay-per-mile auto insurance?
Pay-per-mile car insurance is a type of usage-based insurance that is determined by 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 does pay-per-mile auto insurance work?
If you opt for 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 car insurance costs and can ensure you don’t overpay if you don’t end up driving that much.
The way it works is that Metromile provides drivers with the Metromile Pulse, 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 car 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. The device isn’t just for calculating your pay-as-you-go car insurance but also helps power some smart-driving features.
For example, you can find your car’s location, know when street sweeping is happening in select cities, check your miles, review your trips, and more. All of this data can empower you with information to be a smarter and safer driver.
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.
Is pay-per-mile car insurance worth it?
You might be intrigued with pay-as-you-go car insurance, but the question remains: “Is pay-per-mile car insurance worth it?”
If you’re a low-mileage driver and don’t drive that much, the savings can be powerful.
In fact, drivers saved an average of $741 a year when they made the switch to Metromile, according to a 2018 survey of new customers who saved. Imagine what you could do with that extra savings. You could have more fun money, budget for travel, save more, or pay down debt.
On top of the average savings, drivers can save even more.
If you’re a low-mileage driver who racks up about 48 miles per week, you can stand to save nearly $1,000 a year. Even if you drive more some weeks, you could still save on auto insurance.
Metromile also offers additional discounts to drivers who insure multiple cars on the same policy or install an anti-car theft device or other equipment to make their vehicles safer in some states.
Of course, if you keep a good driving record and stay safe, you could benefit from lower rates for safe driving as well.
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.
How much does Metromile charge per mile?
Let’s say your base rate is $29 per month, and your per-mile rate is 6 cents per mile. Your Metromile 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. With Metromile, your miles are free after driving 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. You don’t have to worry about “going over” with pay-per-mile car insurance and getting a huge surprise bill.
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 car insurance 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.
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.
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.
What type of coverage does pay-per-mile car insurance provide?
Metromile lets you personalize your auto insurance policy to your lifestyle and needs. That way, you won’t pay more than what you need and might actually use.
- Comprehensive coverage
- Liability coverage
- Collision coverage
- Uninsured or underinsured motorist coverage
- Personal injury protection coverage
- Rental car reimbursements
- Medical payments coverage
- Roadside assistance coverage
On top of these robust pay-as-you-go offerings, you can rest assured that 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.
What is the difference between pay-per-mile and pay-as-you-go car insurance?
While pay-per-mile and pay-as-you-go auto insurance are both usage-based types of car insurance, how the policies calculate how you drive may differ.
Pay-per-mile auto insurance rates are typically calculated on the number of miles you drive.
Pay-as-you-go auto insurance, sometimes referred to as pay-how-you-drive insurance, might also consider how you drive overall and look at your driving habits in addition to how much you drive.
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.
You can give pay-per-mile auto insurance a try for free with Metromile. Download the Metromile app and take a Ride Along™ trial. You’ll drive as you usually would for about two weeks (you should keep your current insurance policy to maintain coverage), and then we’ll show you how much you could save if you switch to Metromile.
Drivers can earn an extra discount of up to 15% off your initial car insurance quote for demonstrated safe driving during your trial in select states.