Pay-Per-Mile Car Insurance: Is It Worth It in 2026?
- Pay-per-mile car insurance can save low-mileage drivers money.
- Your bill will likely change from month to month since your cost is based mainly on each mile driven.
- In most cases, you’ll need to let the insurer track your mileage through an app or a plug-in GPS device.
- Not all insurers offer pay-per-mile coverage, so you’ll have to shop around to see if it’s available in your area.
Pay-per-mile car insurance (also known as “pay-as-you-go insurance”) can be worth it if you don’t drive very often. For example, remote workers who don’t commute, city dwellers who use mostly public transportation or individuals with a second car that sits primarily in the driveway may be able to save by paying based on mileage.
But if you drive regularly, a traditional car insurance policy is usually a better deal.
Deciding which type of policy is best will likely come down to how much you drive and the rates you can get from different insurers.
What is pay-per-mile car insurance?
Pay-per-mile car insurance is a type of policy that charges a flat monthly rate plus a small fee for each mile you drive. Just like traditional car insurance, this kind of policy typically includes the main coverages you need (such as liability, comprehensive and collision) as well as limits and deductibles you agree to ahead of time.
Your mileage is tracked either by a telematics device installed in your vehicle, a smartphone app, or periodic odometer photos that you take and send in to your insurance company.
There are two different rates involved in pay-as-you-go car insurance: the base rate and the per-mile rate.
Pay-per-mile insurance has two components: a flat base rate and a per-mile rate. Your monthly bill is calculated by adding your base rate to the total miles you drive that month times the per-mile rate.
Monthly cost = Base rate + (Per-mile rate × miles driven)
For example, if your base rate is $34 per month and you pay 6 cents per mile, driving 800 miles would cost:
$34 + ($0.06 × 800) = $82/month
Drive less and your bill goes down. Drive more and you’ll pay more.
Companies that provide pay-per-mile car insurance are willing to offer these cheaper rates because they figure that if you drive less, you have a lower chance of being in an accident and filing a claim.
Pay-per-mile vs. usage-based vs. low-mileage discounts
If you don’t drive much, there are a few different ways you can save on car insurance.
- Pay-per-mile: You pay a base rate plus a fee for each mile you drive.
- Usage-based: Your insurer tracks elements of your driving, such as how often you brake and your speed, and may adjust your rate based on your driving habits.
- Low-mileage discount: You keep a traditional car insurance policy but get a discount for driving fewer miles.
These options affect your monthly bill in different ways.
Pay-per-mile car insurance pros and cons
Pros
- You could save money when you drive less frequently because your bill is based on lower mileage.
- Good for infrequent drivers or drivers who only go short distances.
- You only pay for miles you drive.
- You can still get standard coverage such as liability, comprehensive and collision.
Cons
- Your bill can vary and your monthly cost goes up the more you drive.
- Mileage tracking is required.
- The coverage is not ideal for frequent drivers.
- Fewer insurers offer it, so your options may be limited depending on where you live.
How much does pay-per-mile car insurance cost?
Since pay-per-mile car insurance is made up of two separate components — a base rate and a per-mile rate — your monthly costs will likely vary. Your base rate covers the cost of keeping your policy active, while the per-mile rate is based on the number of miles you drive each month.
Your base rate is determined by many of the same factors that affect traditional car insurance quotes. These can include your age, driving history, vehicle, location and the coverage you choose. A driver with a clean record and a newer vehicle, for example, may get a different base rate than someone with a history of accidents or tickets.
The per-mile rate is the amount you pay for each mile you drive. This rate is often around $0.06 to $0.08 a mile, but this too can vary by insurer and driver.
Ultimately, that’s one of the biggest differences between pay-per-mile car insurance and traditional car insurance. With a traditional policy, your premium is a set amount for the policy period. With pay-per-mile insurance, your bill can change from month to month based on how much you drive.
A pay-per-mile policy can work in your favor when you’re driving less, but a busy commuting month or a long road trip will mean a higher bill.
Is pay-per-mile car insurance a good idea for you?
The best pay-per-mile insurance can make sense in some situations, but it isn’t right for everyone. At the end of the day, whether you should get it depends on how much you drive.
If your car spends most of its time in the driveway, paying based on your mileage could save you money. If you’re behind the wheel every day, a traditional policy may be a better fit.
Who should consider pay-per-mile car insurance
- Remote workers: If you work from home and rarely commute, you may not put many miles on your car.
- Retirees: If you’re no longer commuting to work, you may drive less than you used to.
- People with an extra car: A car that’s mostly used for errands or occasional trips could be a good candidate for this coverage.
- City dwellers: If you mostly use public transportation, walk or bike, you may not drive enough to justify a traditional policy.
- Seasonal drivers: If you only use your car for part of the year, pay-per-mile insurance may help keep your costs down.
Who should skip it
- Long-distance commuters: A long drive to work every day could lead to higher costs with pay-per-mile coverage.
- Frequent road trippers: Lots of weekend getaways and road trips mean more miles and potentially higher bills.
- Drivers who don’t want mileage tracking: Pay-per-mile insurance requires some way to track how much you drive.
- People who want a predictable monthly bill: Your premium can change from month to month with pay-per-mile coverage, so it may not be the best choice if you prefer a set payment.
How insurers track your mileage
Insurance companies use a few different methods to track how many miles you drive. Most send you a small device that plugs into your car, whereas others use a smartphone app or your car’s built-in technology to track your mileage. Some insurers may also let you submit a photo of your odometer instead.
A plug-in telematics device connects to a port under your dashboard and records your mileage. It then automatically transmits that information to your insurance company. It’s easy to use, but you may not love having a device plugged into your vehicle or having a device monitor your driving, since a telematics device may also track your speed and braking habits.
A smartphone app will track your trips through your phone. This can be convenient because you don’t need an extra device, but it may raise privacy concerns if you’re not comfortable sharing driving data with your insurer.
With a manual odometer reading, you typically take a photo of your odometer and send it to the insurer on a monthly basis.
Frequently asked questions
Not as long as you pay your bills on time. Since your mileage and driving data aren’t reported to the credit bureaus, simply enrolling in and using pay-per-mile insurance will not impact your credit score.
Yes. If you try pay-per-mile car insurance and don’t like it for any reason, you can always switch back to a traditional policy with a set premium. Just make sure your new policy begins before you cancel the old one so you don’t have a gap in coverage.
Pay-per-mile insurance can include the same protections as a traditional car insurance policy, including liability, collision and comprehensive coverage. The main difference is how you pay for the insurance, not necessarily what the policy covers.