When to Consider Pay-Per-Mile Car Insurance

Enrolling in pay-per-mile car insurance could lead to significant savings for drivers with low average mileage.

Elliot Rieth | 

Feb 25, 2025 | 3 min read

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Some insurance providers offer a unique payment model designed for those who get behind the wheel less often than the average driver. If you're a low-mileage driver and are looking for ways to save on your monthly premium, pay-per-mile insurance may be your best option.

What Is Pay-Per-Mile Insurance?

Rather than paying a preset rate, as you do with traditional insurance, pay-per-mile car insurance charges a premium based on how much you drive. Your monthly premium is often a combination of a lower flat-base rate and a per-mile fee. This type of car insurance incentivizes you to drive less in order to save more on your overall costs.

For drivers who don't use their vehicles often, this form of car insurance makes it easy to save on their premiums. In fact, pay-per-mile car-insurance provider Mile Auto claims that low-mileage drivers can get between 30% to 40% off their current rates.

However, pay-per-mile car insurance is not available in all states, may not apply to specific vehicles, and is only offered by a handful of insurance companies.

How Pay-Per-Mile Car Insurance Works

Unlike traditional car insurance, which charges the same fee each month, pay-per-mile car insurance has a variable premium based on your driving habits. Although your daily or monthly flat rate may stay the same, you can raise or lower your overall payment by driving more or fewer miles each month.

What you're charged will depend on typical insurance factors such as age, location, driving record, gender, and vehicle. Similar to a standard car-insurance policy, you also have the option to choose your coverage limits and deductibles, and add benefits like comprehensive and collision protection.

Some insurers, such as Allstate, require you to preload funds into your pay-per-mile insurance account, from which your monthly premiums are deducted based on mileage.

To calculate your monthly mileage, most pay-per-mile insurers will provide you with a telematics device or an app. These are designed to collect driving data and be sent back to your insurer so they can determine and verify your monthly charges.

Some providers could even use driving data, such as hard braking and speeding, to influence your rate.

Pay-per-mile car-insurance providers could also have daily caps for mileage. For example, Milewise from Allstate may only charge you for the first 150 to 250 miles driven daily. However, these mileage caps may ultimately depend on your provider and state.

Per-Mile Car Insurance vs. Low-Mileage Discounts

Although their benefits may seem alike, per-mile car insurance differs from a low-mileage discount. Pay-per-mile car insurance is its own type of insurance policy and uses your mileage as the main factor when determining your overall premium.

Low-mileage discounts take a percentage off your standard policy's overall premium based on a set yearly mileage ceiling.

Who Is Best Suited for Pay-Per-Mile Insurance?

Pay-per-mile insurance is best used by those who drive less than what the Federal Highway Administration found to be the national average of around 13,000 miles per year, or about 35 miles per day.

This could include drivers such as:

• Students
• Retirees or senior drivers
• Remote workers
• Drivers with a rarely used secondary vehicle
• Drivers in walkable cities
• Drivers who often use public transit

To determine how pay-per-mile car insurance can benefit you, consider your average annual mileage, see if such a policy is available and, if so, get quotes from providers to find out what you could be saving by making the switch.

Elliot Rieth

Born and raised in Michigan — the center of the American automotive industry — Elliot's fate of becoming a writer in the automotive space was seemingly predetermined. In addition to covering cars and personal finance for Capital One, he's worked directly with dealers and OEMs to create digital content meant to educate consumers. He's also passionate about music and has written for outlets like In Review Online. When he isn't writing about the latest financial, automotive, and insurance trends, he can be found enjoying a new book or record alongside his two greyhounds.