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PAY PER MILE CAR INSURANCE – A LIFE-CHANGING PROGRAM?

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November 3, 2021
PAY PER MILE CAR INSURANCE – A LIFE-CHANGING PROGRAM?

Pay per mile car insurance is a perfect solution for low-mileage drivers. It’s a great way to save some money on auto insurance. Whether you’re a student or simply someone who doesn’t drive a lot, this policy will certainly sound interesting to you.

Auto insurance can be quite expensive, especially if it includes all those useful add-ons. However, that doesn’t mean everybody has to pay the same premium. You can select an option that suits your driving needs the most.

Below you’ll learn what the car insurance “pay as you go” program is, how it works, how it compares with other policies, where you can find it, and what its pros and cons are.

What is car insurance by the mile?

Car insurance by the mile is the insurance policy that calculates the monthly payments depending on how much you drive. To be more precise, it tracks the distance you travel during a month and lets you pay the premium accordingly.

This pay per mile car insurance policy is similar to the traditional insurance packages in the sense that it also utilizes a base rate. Agencies usually calculate the latter depending on your age, credit scores, mileage, driving history, vehicle, and location. For example, if you’re a young driver, your premium will be higher compared to an experienced motorist.

According to Metromile, sometimes companies consider how long someone’s had insurance while working out by miles car insurance rates. Naturally, the base cost will also vary depending on the coverage you select.

Consequently, this type of insurance isn’t for you if you’re a high-mileage driver. It would be more expensive than a traditional insurance policy. So, if you cover hundreds of miles daily (or more than 37 miles), it’s better to stick with good ol’ insurance.

How does by miles car insurance work?

The principle of by miles car insurance

Pay per mile insurance calculates your monthly rates by tracking your mileage with a specialized device. As a rule, it’s some sort of software that you plug into your OBD port. It will determine your location and the length of your trips. It will then save that information.

Based on the collected data, your insurer will calculate your payment. Let’s say you drove 20 miles each day during the previous month. That would amount to 600 miles. The base charge of your insurance company is $29 a month. Additionally, they will charge 6 cents for each mile. As a result, your monthly payment would be $29+(600×6¢) = $65. That’s way less than the whopping $300 monthly premium in Michigan.

You should remember that insurance rates vary significantly from one state to another. If you live in one of the cheapest states for insurance (Maine, Idaho, Iowa, Indiana, Ohio, North Dakota, New Hampshire, South Dakota, Virginia, Vermont), mileage-based insurance mightn’t be worth it.

You see, the average monthly insurance rate in Maine is around $49. In this case, mileage-based insurance might cost you even more. Therefore, it’s always best to calculate your quote online before you select a specific policy. That way, you’ll be able to find cheap insurance that suits your driving needs the most.

Car insurance pay as you go VS usage-based auto insurance

Car insurance pay as you go and usage-based insurance seem quite similar at first glance. They both track your driving, right? However, they consider different factors while calculating your premium.

As we’ve seen, mileage-based insurance tracks your mileage to work out your payments. It doesn’t care how you drive your car. Careful driving might yield an additional discount for you, but it’s not the primary thing mileage-based insurance will consider.

The usage-based insurance, on the contrary, rewards safe drivers. If you choose such insurance, your agency will ask you to install a telematics device. The latter will track your speed, acceleration, how hard you brake or corner, how much you drive, what time of day it is, how often you use your phone while driving.

Even though usage-based insurance might track your mileage, it won’t calculate your premium depending on the actual miles driven. Instead, you’ll get a discount if you drove safely.

Usage-based insurance faces a lot of controversies. The programs that reward safe drivers usually include numerous rules that you should follow. Your driving habits will be tracked precisely and even a minor mistake might cause you to lose your discount. Plus, such insurance has major security issues. The telematics devices collect a lot of data from vehicles, which could in turn violate your privacy.

Consequently, mileage-based insurance is a better option if you don’t drive frequently. You can drive as vigorously as you want – the main thing here is to abstain from lengthy trips. If you choose usage-based insurance inadvertently, you might end up paying more compared to traditional insurance.

Which companies offer pay per mile insurance?

A lot of companies offer car insurance by the mile, including:

  • Allstate Milewise: it’s a program that charges you a standard rate along with the per-mile fee. Their rates will vary depending on your car and average mileage. However, as a low-mileage driver, you’ll probably pay around $20 per month. Unfortunately, this program doesn’t operate in every state. Currently, they are only available in 15 states;
  • Progressive: this insurance company has a Snapshot program that tracks how you drive, how many miles you cover, which time of the day it is. They calculate your premium based on your data. This program is available in almost every state, which is a huge benefit considering how rare mileage-based insurance can be;
  • Metromile: this insurer offers standard mileage-based insurance. As of now, their standard rate is $29 and they charge 6 cents for each mile you drive. They promise to save you around $740 per year. Specific numbers may vary, but we can all agree that these rates are still lower compared to traditional auto insurance;
  • Nationwide SmartMiles: this is probably the most widespread low-mileage insurance. Unlike other companies, they are available in the majority of states. They offer the same coverage as they would with traditional insurance. Their rates are higher compared to other insurance companies we’ve discussed above. Namely, they charge $35 as a base rate and add 7 cents per mile.

Pros and cons of low-mileage insurance

Advantages and disadvantages of low mileage insurance

Even though by miles car insurance sounds like a great option, it’s still crucial to weigh out its pros and cons before making the final decision. After all, everything in this world has a drawback or two.

Pros of mileage-based insurance

Cons of pay per mile car insurance

  • It’s not available in every state – none of the companies is available nationwide. Those that are might be more expensive compared to the rest;
  • Insurance companies track your location and driving habits – this mightn’t be an issue for everybody. However, some people aren’t comfortable with sharing their location and other personal information;
  • Your rates will increase significantly if you suddenly start driving a lot;

Mileage Odometer Blocker

As you can see mileage has an important role in our everyday life and hugely affects our monthly/yearly payments. That’s why the young team from Germany created a special gadget for you – a mileage blocker. It halts the KM/mileage recording process from all control units. As the information about the mileage is not stored in any control unites, this odometer stopper has an untraceable effect. To make your life even more comfortable it also has its own mobile application which enables you to access several features via your phone. Find out more about this innovative tool and choose the one for yourself.

Fortunately for us, the mileage blocker is available online and you can purchase it anytime. It has an easy installation guide for every car manufacturer so you don’t necessarily need to go to a special service centre. In case of any further questions, you can always contact the support team of the company.

Final Takeaway

Pay per mile car insurance is a great way to save some money. It’s certainly a game-changer for people who drive occasionally. Instead of scrutinizing cars, it pays more attention to your monthly mileage. It won’t be suitable for everybody, but I don’t think that will be an issue. It targets low-mileage drivers by allowing them to pay as much as they drive without sacrificing the coverage.

Make sure to compare prices and select the option that sounds the best to you!

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