What’s Pay-Per-Mile Car Insurance?

WRITTEN BY: Julia Matseikovich


Pay-per-mile car insurance isn’t hard to figure out. It’s a great benefit for drivers who don’t use their cars often. Insurers reward drivers with low mileage, which saves you some money.

Insurance companies believe that the more you’re on the road, the more likely you will get into an accident. By rewarding drivers who keep their mileage low, they save money and keep rates down.

Not all insurers offer this program as part of their auto insurance plans. Let’s look at the pros and cons of pay-per-mile car insurance.

How Does Pay-Per-Mile Insurance Work?

Pay-per-mile car insurance works by charging a daily or monthly rate for coverage. They also add a small fee for each mile you drive.

They calculate your base rate using standard rating factors such as where you live, age, gender, driving record, and the vehicle you drive. You essentially have your driving habits, behavior, and history tracked during this process.

Insurers track your mileage using a device that plugs into your car’s OBD port under the dashboard. Some hybrid or electric vehicles might not be compatible. There is a mileage cap, so you don’t have to worry about insurers overcharging you for your mileage use on your car insurance policy.

Should you get it?

Pay-per-mile auto insurance is only cheap if you drive infrequently, so it’s probably not best for someone who loves road trips. Otherwise, it might end up being more than standard car insurance.

An insurer may offer you a base rate of $60 monthly plus 10 cents per mile driven. If you drive 1,200 miles monthly, you will pay an additional $120 per month on top of the $60.

How pay-per-mile differs from telematics insurance and other rate plans

These car insurance policies are different than traditional policies. Many insurers rely on technologies such as in-car sensors to monitor driving behavior.

This helps them to determine rates and to track your driving history. The use of these types of devices is referred to as telematics. Safe driving is essential to insurers, so your driving history is examined.

Some insurance companies charge customers a per-mile fee but not all do. Some offer a telematics discount based on mileage or safe driver behavior.

Root, for example, provides a price-based auto insurance policy on various driving metrics and the number of miles.

Car Insurance Companies Who Offer Pay-Per-Mile Car Insurance

Not all insurers offer the program, so you need to do a small amount of research to see what company is right for you. Below are some great options to choose from.


Metromile determines your rate in two ways: your monthly mileage and your driving profile. They calculate your driving mileage through “Metromile Pulse,” allowing you to monitor your mileage through an app based on your odometer.


Allstate has a Milewise program using a base rate with an additional charge per mile. They base your rate on your driving habits. The mobile app allows you to monitor your mileage and set weekly goals.

  • Daily mileage cap: 250 miles
  • Sample rate: $1.50/day plus $0.06/mile
  • Availability: WA, TX, VA, PA, AZ, OR, DE, OH, ID, NJ, IL, FL, IN, MD, MA
  • Estimated savings: 49% for customers who drive 5,000 miles annually
  • How it works: Policyholders must install a tracking device in the car and have a credit card on file. Costs are charged to the vehicle after each trip.


Nationwide has a Smartmiles program offering low-mileage drivers to save on car insurance costs. The service is available in most states for cars produced after 1996.

  • Daily mileage cap: 250 miles
  • Sample rate: $35/month plus $0.07/mile
  • Availability: WY, WV, AR, IN, AZ, IL, CO, GA, FL, CT, DC, IA, KS, WI, WA, VT, KY, NE, MD, ND, MT, MS, MO, MN, OH, OR, NH, NM, NV, VA, PA, RI, UT, TX, TN, SD, SC
  • Estimated savings: Average of $320 yearly
  • How it works: Customers install a tracking device and pay monthly

Is Pay-Per Mile Car Insurance Worth it?

It’s only worth it if you drive less than 12,000 yearly. It’s always a good idea to accurately estimate how many miles you use to compare the rates with different companies.

Drivers likely to benefit from pay-per-mile car insurance:

  • Retirees
  • People who work from home
  • Drivers of leased cars with strict mileage limits
  • Occasional weekend drivers
  • People who walk or take public transportation often
  • College students who don’t commute to class
  • Individuals or families with an extra vehicle that’s rarely used

If you’re not sure whether you would benefit from pay-per-mile car insurance, it’s best to take a few weeks to track your mileage. Once you know how many miles you use, comparing car insurance rates is the next step.


What is the Milewise daily cap?

The daily cap for Milewise and most other pay-per-mile car insurance programs is 250 miles which helps determine your monthly base rate.

What is the best mileage for car insurance?

Staying below 12,000 miles yearly is the best mileage for car insurance. The standard mileage for pay-per-mile programs in Arizona is 56 cents per miles.

Is insurance cheaper with lower mileage?

Car insurance premiums are determined based on several variables, including mileage. Drivers who spend more time on the road, tend to have higher premiums. If you have low mileage, you might be eligible for low-mileage discounts similar to standard insurance.

Why do you pay more for insurance when you put a lot of miles on your car?

Insurers use your mileage to determine your car insurance premiums and coverage options. Statistically, if you spend a lot of time on the road, you’re more likely to have an accident. For insurers, higher annual mileage means higher insurance costs.

Does Milewise track speed?

Yes, Allstate Milewise uses a tracking device that plugs into your vehicle’s OBD port to detect how many miles you’re using. Allstate views the information on your online account.

How does Milewise work?

Customers install a tracking device in the car that Allstate tracks. You need to have a credit card on file, and costs are charged to the vehicle after each trip.

What is a Milewise policy?

Milewise is pay-per-mile programs that offer a discount for driving less, and gives you feedback on your driving which is different from traditional car insurance. Choose the pay-per-mile vehicle option, the unlimited vehicle option, or both. You pay a low rate, and per-mile rate when you’re driving.

What is the average mileage for a car?

The average amount of miles driven in the United States is roughly 14,263, according to the U.S. Department of Transportation Federal Highway Administration data from 2019.

How to Find Pay-Per-Mile Car Insurance

If pay-per-mile car insurance is right for you, getting started is easy. All you have to do is complete a form to get rates side by side now. An agent answers your questions and allows you to obtain a quote for your rate per mile. It’s a great way to get some idea of whether this is the right program for you.