Pay-Per-Mile: Can You Really Save Money?

Pay-per-mile insurance is a type of car insurance where the premium is calculated based on the number of miles driven. This approach is ideal for low-mileage drivers, such as those who work from home, retirees, students, or those who don’t drive often.

How pay-per-mileage insurance works

The system includes a prime rate and a mileage rate. The prime rate depends on your age, driving history, type of coverage and other factors. The mileage rate is added based on how many miles you drive in a month. For example, if the prime rate is $30, the mileage rate is $0.05 per mile, and you drive 500 miles, your monthly premium would be $55.

Various tools are used to track your mileage: mobile apps, devices that plug into your car’s OBD-II port, or photos of the odometer.

Benefits of pay-per-mile insurance

• Savings: For low-mileage drivers, it can be cheaper than traditional insurance.
• Honest pricing: You only pay for the mileage you actually drive.
• Flexibility: If your driving changes, you can save money when you don’t drive as often.
• Increased driving awareness: Programs can track your behavior and help you become a safer driver.

Disadvantages

• Expensive for high-mileage drivers: If you drive often, traditional insurance may be more cost-effective.
• Variable costs: Your premium will vary depending on your mileage.
• Privacy concerns: The insurer may collect data about your location and behavior on the road.
• Limited availability: This insurance is not available in all states.

Who pay-per-mile insurance is suitable for

This type of insurance is ideal for those who drive less than 10,000 miles per year. This could be people who work from home, retirees, students, or those who use public transportation. It will also be useful for those who don’t mind tracking their mileage.

How to choose the best pay-per-mileage insurance

Compare rates and study customer reviews. It’s important not only to evaluate the cost, but also to make sure that the coverage fits your needs and that the ways you track your mileage suit you.