Pay-Per-Mile Car Insurance

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Updated: July 4, 2025

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Key Takeaways

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Pay-per-mile insurance is ideal for low-mileage drivers. Insurers base your total premium on the miles you've driven, making it a cost-effective option for low-mileage drivers.

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Eligibility requirements for low-mileage drivers vary by insurer. In most cases, you'd need to log fewer than 10,000 miles annually.

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Metromile specializes in pay-per-mile coverage, but major insurers like Nationwide, Allstate and Liberty Mutual are expanding their offerings. Program availability depends on the state.

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What Is Pay-Per-Mile Car Insurance?

Pay-per-mile car insurance is a usage-based coverage model that charges drivers based on actual miles driven rather than estimated annual mileage. This mileage-based car insurance combines a monthly base rate with a per-mile fee, creating variable premiums that adjust automatically based on your driving patterns.

It provides the same coverage options as traditional policies, including liability, comprehensive and collision insurance. The only difference is how your premium is calculated and billed, making it ideal for drivers who want full financial protection without paying for unused coverage

How Does Pay-Per-Mile Car Insurance Work?

Your monthly premium combines a fixed base rate with variable mileage charges calculated from your actual driving distance. This dual-rate structure ensures you pay for basic coverage while only paying additional costs for the miles you actually drive.

    Base Rate Plus Per-Mile Calculation

    Your base rate covers standard insurance factors like your age, vehicle type, location and driving history, similar to traditional policies. This fixed monthly amount depends on your risk profile and coverage selections.

    The per-mile rate usually falls between 2 and 10 cents per mile, varying by insurer and your specific circumstances. For example, with a $60 base rate and $0.10 per mile, driving 1,200 miles monthly would cost $180. If you only drive 400 miles the next month, your premium drops to $100. This calculation happens automatically each billing cycle based on your tracked mileage data.

    Mileage Tracking Methods

    Insurance companies use three primary tracking methods to monitor your driving distance.

    • Plug-in devices connect to your vehicle's OBD-II diagnostic port (a standard connector in cars made after 1996), automatically collecting mileage data and transmitting it to your insurer without requiring any action from you. These small devices don't affect your vehicle's performance or battery life.
    • Mobile apps track your driving using GPS technology, running in the background on your smartphone to calculate distances traveled. Most apps start tracking automatically when you begin driving and stop when you park, providing detailed trip logs and mileage summaries.
    • Odometer photo submission requires you to upload monthly photos of your odometer reading through your insurer's app or website. This low-tech option works well for drivers who prefer minimal technology but requires consistent monthly reporting to ensure accurate billing and avoid estimation charges.

    Billing Cycle Process

    Most pay-per-mile insurers bill monthly based on your previous month's driving data. Your tracking device or app sends mileage information to your insurer throughout the month, with final calculations completed after your billing cycle ends. You'll receive a detailed breakdown showing your base rate, total miles driven, per-mile charges, and final premium amount. 

    Some insurers offer daily mileage caps, often 250 miles, meaning you won't pay for additional miles beyond that limit on any single day. This feature prevents unexpectedly high bills during road trips or unusually long driving days while maintaining affordable coverage for occasional extended travel.

Pay-Per-Mile Insurance vs. Traditional Car Insurance

Traditional car insurance estimates your annual mileage during the quote process and charges a fixed premium regardless of actual driving. With pay-per-mile coverage, your premium fluctuates monthly based on real driving data. If you drive less one month, you pay less automatically without needing to contact your insurer or adjust your policy.

Category
Traditional Car Insurance
Pay-Per-Mile Car Insurance

Pricing Structure

Traditional insurance uses estimated annual mileage and charges a fixed premium regardless of actual driving.

Pay-per-mile insurance adjusts monthly based on real usage.

Cost Variability

The premium for traditional insurance remains constant, regardless of whether you drive 500 miles or 2,000 miles in a month.

Your monthly premium fluctuates with pay-per-mile insurance.

Tracking Requirements

Traditional policies don't monitor your driving habits or mileage.

Pay-per-mile insurance requires continuous mileage tracking through apps or devices.

Target Clients

Traditional insurance serves all drivers.

Pay-per-mile specifically benefits low-mileage drivers who drive fewer than 10,000 miles annually.

Pay-Per-Mile Car Insurance vs. Behavior-Based Car Insurance

Pay-per-mile and behavior-based car insurance both adjust premiums based on usage, but they focus on different factors. Pay-per-mile insurance calculates costs based on how many miles you drive, making it a good choice for low-mileage drivers. Behavior-based insurance adjusts rates based on how safely you drive. It rewards responsible habits and may raise rates for risky behaviors.

Behavior-based insurance often tracks driving behaviors such as:

  • Sudden braking or rapid acceleration
  • Phone use while driving
  • Sharp cornering
  • Weekend driving
  • Nighttime driving
  • Driving in bad weather
  • Speeding
  • Maintaining smooth driving habits
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SAFE DRIVING PAYS: BEHAVIOR-BASED INSURANCE EXPLAINED

Behavior-based insurance plans reward safe driving habits, such as smooth driving, with lower premiums. However, engaging in unsafe behaviors could lead to higher rates.

How Much Is Pay-Per-Mile Car Insurance?

Pay-per-mile car insurance costs average $65 to $149 per month for comparable coverage. The total cost depends on your base rate, per-mile charge and the number of miles you drive. Several factors influence your pay-per-mile insurance costs, including base rate factors, per-mile charges, monthly mileage and coverage selection.

Pay-Per-Mile Car Insurance Rates

The table below compares estimated monthly rates from various insurers, showing how costs vary based on mileage and provider:

Insurer
Monthly Rate

Metromile (26 miles per week)

$65

GEICO

$66

Mercury

$72

Country Financial

$72

USAA

$73

*Note: MoneyGeek's sample quote from Metromile in Illinois includes a base rate of $56 and $0.08 per mile, totaling $65 per month for low-mileage drivers. This is slightly lower than GEICO's $66 and much less than AAA's $139 for similar coverage.

Pay-Per-Mile Car Insurance Companies

Pay-per-mile insurance is a good choice for low-mileage drivers but isn't widely available. Only a few major car insurance providers offer these programs in select states.

Pay-per-mile insurance can help low-mileage drivers save money, but comparing coverage, customer service and claims processes is important before selecting a policy. Top providers include Metromile, Nationwide, Liberty Mutual and Allstate.

Company logo for Nationwide
Best Pay-Per-Mile InsuranceNationwide
Overview

Nationwide is the top choice for pay-per-mile car insurance. Available in 40 states, it's the most widely accessible option. Its SmartMiles program charges a base monthly rate and a per-mile rate. Also, Nationwide provides an exception for road trips. Only the first 250 miles driven in a day count toward your premium. Drivers can save even more with up to a 10% discount for safe driving.

Available in AR, AZ, CO, CT, DC, FL, GA, IA, ID, IL, IN, KS, KY, MD, ME, MI, MN, MO, MS, MT, ND, NE, NH, NM, NV, OH, OR, PA, RI, SC, SD, TN, TX, UT, VA, VT, WA, WI, WV and WY

Company logo for Allstate
Allstate
Overview

Allstate's Milewise program charges a daily rate plus a per-mile fee, allowing drivers to pay based on usage. Available in 16 states and Washington D.C., it's more accessible than some competitors. However, it doesn't offer discounts, so savings depend solely on driving habits.

Available in AZ, DE, FL, ID, IL, IN, MA, MD, NJ, OH, OR, PA, TX, VA, WA, WV and DC

Company logo for Metromile Auto
Metromile Auto
Overview

Metromile's pay-per-mile insurance charges a monthly base rate plus a per-mile fee, making it ideal for low-mileage drivers. It uses a tracking device to monitor mileage but doesn't offer discounts, so savings depend entirely on how little you drive. 

As a pioneer in the pay-per-mile space, Metromile offers specialized expertise and technology designed specifically for usage-based insurance.

Available in AZ, CA, IL, NJ, OR, PA, VA and WA

Company logo for Liberty Mutual
Liberty Mutual
Overview

Liberty Mutual's ByMile program tracks mileage and bills drivers based on miles driven in the previous month plus a base rate. Its 150-mile daily cap prevents excessive charges for long trips.

Availability is limited to select states, and the program doesn't offer discounts.

Should You Get Pay-Per-Mile Car Insurance?

Pay-per-mile insurance works well for low-mileage drivers, including remote workers, retirees and those who use their cars occasionally. If you drive less than 10,000 miles annually, it may cost less than a traditional policy. Based on Metromile's pricing, drivers traveling fewer than 26 miles weekly could see the biggest savings. However, a standard policy might be more affordable if you drive often.

Who Qualifies for Pay-Per-Mile Car Insurance?

Pay-per-mile insurance isn't available to every driver or in every location. Understanding eligibility requirements helps you determine if this coverage option fits your situation before applying.

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    Basic Qualification Requirements

    Most pay-per-mile insurers require drivers to be at least 18 years old with a valid driver's license and a clean driving record. You'll need a smartphone compatible with tracking apps or a vehicle equipped with an OBD-II port for plug-in devices. Your car must be in the model year 1996 or newer to accommodate the required mileage tracking technology. 

    Insurance companies may review your driving history for the past three to five years, looking for major violations like DUI convictions, reckless driving charges or multiple at-fault accidents. A history of frequent claims or policy cancellations may disqualify you from pay-per-mile programs.

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    State Availability and Restrictions

    Pay-per-mile insurance isn’t available in every state. Programs commonly exclude Alaska, Hawaii, Louisiana, New York, North Carolina, and Oklahoma due to state-specific insurance regulations. Availability may change based on regulatory approval, so check with providers for current offerings.

    Some states impose restrictions on mileage tracking or data use. For example, California doesn’t allow insurers to use telematics data for rating, so companies may use odometer readings instead. Other states require clear privacy disclosures or limit data collection practices.

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    Credit Score and Financial Factors

    Credit-based insurance scores can influence your rates, but poor credit doesn’t necessarily disqualify you. However, insurers may assess your financial history, including payment reliability and past insurance behavior, to evaluate pricing and risk.

    Pay-per-mile programs often require month-to-month billing based on miles driven, so insurers may review your payment consistency and ability to maintain continuous coverage.

Pay-Per-Mile Insurance for Special Situations

Pay-per-mile insurance isn't just for daily commuters with predictable driving patterns. Here's how this coverage works for road trips, seasonal driving changes and other scenarios that might affect your monthly bills.

  • Road Trips and Daily Mileage Caps: Don't worry about pay-per-mile insurance breaking your budget during vacation road trips. Most insurers cap daily charges at 250 miles, meaning you won't pay for every mile on a 500-mile driving day. You'll only pay for the first 250 miles, making long-distance travel more affordable than you'd expect.
  • Seasonal Driving Variations: Snowbirds and seasonal residents benefit from pay-per-mile insurance because their driving patterns change dramatically throughout the year. If you drive 1,000 miles monthly during the summer travel season but only 200 miles during winter months when you stay local, you'll see substantial savings during low-driving periods without requiring policy changes. 
  • Multiple Vehicle Scenarios: Families with multiple vehicles often find that pay-per-mile insurance works best for their least-used car. If you have a primary commuter vehicle and a weekend-only car that sits unused most days, switching just the weekend car to pay-per-mile coverage can reduce your overall insurance costs.
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BUSINESS VS. PERSONAL USE DISTINCTIONS

In most cases, pay-per-mile insurance covers personal use only. Check policy terms if you occasionally use your vehicle for business purposes. Many insurers allow incidental business use, like driving to the office or occasional work meetings. However, regular commercial activity needs separate coverage to ensure you maintain proper financial protection while managing costs effectively.

How to Sign Up for Pay-Per-Mile Insurance

Switching to pay-per-mile insurance sounds complicated, but the enrollment process takes about 15 to 30 minutes online. Here's exactly what to expect when making the switch and how to set up mileage tracking for accurate billing.

  1. 1

    Check your eligibility and gather documents

    Check your current annual mileage to confirm you'll save money. Pay-per-mile insurance works best for drivers who log fewer than 10,000 miles annually. Depending on the company, the mileage requirement may differ. Gather your current policy information, driver's license, and vehicle details (VIN, make, model, year) before starting the application 

    Most insurers require downloading of their mobile application during the enrollment process. Make sure your smartphone is compatible with the app. You’ll also need to verify your car’s odometer reading. Your insurance provider will use this as the starting point for mileage tracking.

  2. 2

    Get a personalized quote and apply

    Visit your chosen provider’s website. You may need to enter basic information, such as your ZIP code, vehicle details and driving history. The quote process is like that of traditional insurance applications, but you'll likely answer additional questions about your typical monthly driving patterns. 

    Pay-per-mile insurers often ask about your commute distance, weekend driving habits, and whether you take regular road trips. Answer honestly since this helps them set your base rate and daily mileage allowances.

  3. 3

    Set up mileage tracking

    After approval, you'll choose your mileage tracking method. Most insurers offer three options: mobile app tracking, plug-in devices or odometer photo submission.  

    • Mobile app tracking uses your phone's GPS. 
    • Plug-in devices connect to your car's diagnostic port and transmit data without user input.
    • Odometer photo submission requires you to upload monthly photos through the app or website. This method works for drivers who prefer minimal technology but requires consistent monthly reporting to avoid billing errors.
  4. 4

    Complete your first billing cycle

    Your first bill covers a partial month while the tracking system calibrates. The initial charge may seem high, but this is because insurance companies often estimate mileage for the first week or two until official tracking starts.

    Use the company’s app or online portal to monitor your daily mileage and understand your driving patterns. Most insurers provide real-time mileage updates and projected monthly costs, helping you budget effectively.

  5. 5

    Set up cost monitoring and budget controls

    Set mileage alerts through your insurer's app to avoid surprise bills. Many companies let you set warnings at 80% and 90% of your monthly budget, giving you time to reduce driving if needed.

    Keep track of your monthly savings. Compare your pay-per-mile bills and your previous standard car insurance premiums. Seasonal variations in driving will affect your bills, so budget for potentially higher expenses during summer vacation and lower costs during winter months or when you drive less frequently.

Pay-Per-Mile Auto Insurance: Bottom Line

Pay-per-mile insurance adjusts costs based on mileage, making it a good option for low-mileage drivers. This guide explains how it works, who benefits most and how top insurers like Metromile, Nationwide and Allstate stack up.

You can maximize benefits through accurate self-assessment of your driving habits. Comparing available providers and offers also help. Although it may not be suitable for everyone, pay-per-mile insurance represents an innovative approach to auto insurance that aligns costs with actual usage.

Compare Auto Insurance Rates

Ensure you're getting the best rate for your auto insurance. Compare quotes from the top insurance companies.

Why do we need ZIP code?

Pay-Per-Mile Insurance: FAQ

MoneyGeek addresses frequently asked questions about pay-per-mile auto insurance to help you better understand this coverage.

When is pay-per-mile car insurance worth it?

How do pay-per-mile car insurance calculations work?

What is the best pay-per-mile insurance plan?

How do I set up pay-per-mile insurance?

What are the privacy concerns with mileage tracking?

How do daily limits work for road trips?

Can I use pay-per-mile insurance for business driving?

Best Pay-Per-Mile Car Insurance: Our Review Methodology

Pay-per-mile insurance sounds great in theory. You only pay for what you drive. But figuring out if it'll actually save you money requires comparing real rates across different mileage scenarios and understanding how these policies work in practice. We designed our research to answer the questions low-mileage drivers actually ask: Which companies offer the best rates? How much can you really save? And what coverage options work best when you're not driving much?

Our Research Approach

We gathered 83,056 quotes from 46 insurers across 473 ZIP codes to build a complete picture of pay-per-mile insurance costs. This wasn't just about finding the cheapest rates — we wanted to understand how pay-per-mile pricing works across different coverage levels and for drivers with various risk profiles. 

Our driver profile represented:

  • a 40-year-old male
  • driving a Toyota Camry LE
  • with a clean driving record,
  • and logs 12,000 miles driven annually

Coverage levels tested:

  • National comparisons: 100/300/100 coverage ($100,000 bodily injury per person, $300,000 per accident, $100,000 property damage)
  • State-by-state analysis: 50/100/50 coverage to match typical state requirements
  • $1,000 deductible for both scenarios

Here's why this approach matters: Pay-per-mile insurance isn't just about low mileage. It's about finding the right balance of coverage and cost. A $1,000 deductible, for example, means you'd pay that amount before insurance covers the rest of a claim. With a $2,000 fender-bender, you'd pay $1,000 and insurance covers the remaining $1,000.

Data sources included:

  • State insurance departments for regulatory compliance
  • Quadrant Information Services for rate accuracy
  • Customer service testing for real-world usabilit 

This comprehensive approach ensures our recommendations reflect what you'll actually pay when you get quotes, not just theoretical savings. We focused on companies that make pay-per-mile insurance accessible to everyday drivers, not just those with perfect records or specific demographics.

Learn more about MoneyGeek's methodology.

Pay-as-You-Go Car Insurance: Related Articles

About Mark Fitzpatrick

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Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.

Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!

Passionate about economics and insurance, he aims to promote transparency in financial topics and empower others to make confident money decisions.

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