What Is Pay-per-mile Car Insurance?

Getting rates based on how much you drive is a smart way to reduce costs, especially if you do not drive as much as the average U.S. driver. Find out more about Pay-per-mile coverage and get free auto insurance quotes online, from our website. We provide offers from the best regional and national car insurance companies.

Odometer_3Insurance by the mile bills you monthly based on how much you drive. The potential savings vary from 40 to 50 percent for those who drive less than 5,000 miles a year. In order to get your mileage recorded, you stick a telematics device into the vehicle’s onboard diagnostics (OBDII) port. Most cars from 1996 and later have an OBDII port.

Customers are charged a base monthly rate determined by individual rating factors: the driver’s age and location, driving record, type of car and, in some states, credit and insurance history. At the end of the month, the driver pays the base rate plus a per-mile fee based on the miles reported through the device. The per-mile fee tops out at 150 miles a day (250 in Washington state, making allowances for the occasional long trip.

Currently, there are 2 companies offering pay-per-mile services: Metromile and Esurance. Every mile usually costs a few cents. So if you drive 100 miles per month at a rate of 5 cents per mile, you would be charged $5. The base rate, which is consistent every month, is usually anywhere from $20 and up, depending on typical insurance factors.

Those who will benefit the most from pay-to-drive or pay-per-mile are those who drive less than the national average of 12,000 miles per year. A driver with a clean record can get car insurance for less than $1,000 with a low monthly mileage count at Metromile or Esurance.

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