The Benefits of Pay-Per-Mile Car Insurance

Car insurance is a necessity for anyone who owns and drives a vehicle. However, for many drivers, car insurance can be a costly and inefficient expense. According to a report by AAA, the average annual cost of car insurance in the US was $1,202 in 2019, which is more than 10% of the average annual cost of owning and operating a vehicle. Moreover, according to a report by the US Department of Transportation, the average annual miles driven per vehicle in the US was 11,484 in 2018, which is less than half of the typical 12,000-mile limit for most car insurance policies.

If you are a driver who drives less than average, you might be wondering if there is a better way to pay for car insurance that reflects your actual usage and behavior. Fortunately, there is an innovative and alternative option that can help you save money and enjoy other benefits: pay-per-mile car insurance.

Pay-per-mile car insurance is a type of car insurance that charges you based on the actual miles you drive, rather than a fixed rate. With pay-per-mile car insurance, you pay a low base rate per month, plus a per-mile rate for each mile you drive. The per-mile rate is usually calculated using a device or an app that tracks your mileage and sends it to your insurance provider. The less you drive, the less you pay.

In this article, we will highlight some of the benefits of pay-per-mile car insurance for drivers who drive less than average. We will show you how pay-per-mile car insurance can help you save money on car insurance premiums, reduce environmental impact and traffic congestion, enjoy flexible and customizable coverage, and access smart technology and features.

Benefit 1: Save Money on Car Insurance Premiums

One of the main benefits of pay-per-mile car insurance is that it can lower your car insurance premiums by charging you based on your actual miles driven, rather than a fixed rate. This means that if you drive less than average, you can save money on your car insurance compared to traditional car insurance.

How much money can you save with pay-per-mile car insurance? It depends on several factors, such as your base rate, per-mile rate, mileage, and other factors that affect your car insurance rates, such as location, vehicle type, coverage level, etc. However, according to some estimates by pay-per-mile car insurance providers, drivers who drive less than 10,000 miles per year can save up to 40% or more on their car insurance premiums with pay-per-mile car insurance compared to traditional car insurance.

For example, let’s say you drive 8,000 miles per year and pay $1,200 per year for traditional car insurance. If you switch to pay-per-mile car insurance and pay a base rate of $30 per month and a per-mile rate of $0.05 per mile, your annual premium would be $780 ($30 x 12 + $0.05 x 8,000), which is a 35% savings compared to traditional car insurance.

There are several providers that offer pay-per-mile car insurance in the US market. Some of them are:

• Metromile: Metromile is one of the pioneers and leaders of pay-per-mile car insurance in the US. It offers full coverage policies that include liability, collision, and comprehensive coverage, as well as optional add-ons such as roadside assistance, rental reimbursement, and pet injury protection. Metromile’s base rates range from $29 to $121 per month, and its per-mile rates range from $0.02 to $0.14 per mile, depending on various factors. Metromile also offers a device and an app that track your mileage, monitor your driving habits, provide trip insights, and more. Metromile is currently available in eight states: Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia, and Washington.

• Mile Auto: Mile Auto is another provider of pay-per-mile car insurance in the US. It offers liability-only or full coverage policies that include liability, collision, and comprehensive coverage. Mile Auto’s base rates range from $25 to $75 per month, and its per-mile rates range from $0.03 to $0.09 per mile, depending on various factors. Mile Auto also offers a unique and simple way to track your mileage: you just take a photo of your odometer once a month and send it to Mile Auto via an app or email. Mile Auto is currently available in three states: Georgia, Illinois, and Oregon.

• Allstate Milewise: Allstate Milewise is another provider of pay-per-mile car insurance in the US. It offers full coverage policies that include liability, collision, and comprehensive coverage, as well as optional add-ons such as roadside assistance, rental reimbursement, and sound system coverage. Allstate Milewise’s base rates and per-mile rates vary depending on various factors, but according to its website, drivers can save an average of 20% on their car insurance premiums with Allstate Milewise compared to traditional car insurance. Allstate Milewise also offers a device and an app that track your mileage, monitor your driving habits, provide feedback and tips, and more. Allstate Milewise is currently available in 14 states: Arizona, Delaware, Florida, Idaho, Illinois, Indiana, Maryland, New Jersey, Ohio, Oregon, Texas, Virginia, Washington, and West Virginia.

Benefit 2: Reduce Environmental Impact and Traffic Congestion

Another benefit of pay-per-mile car insurance is that it can encourage drivers to drive less and use alternative modes of transportation, such as public transit, biking, or walking. This can have positive effects on the environment and society by reducing greenhouse gas emissions, air pollution, and traffic congestion.

According to the US Environmental Protection Agency, transportation accounted for 28% of the total greenhouse gas emissions in the US in 2018, making it the largest contributor to climate change. Moreover, according to the American Lung Association, transportation was also a major source of air pollution in the US, which can cause health problems such as asthma, lung cancer, and cardiovascular disease. Furthermore, according to the Texas A&M Transportation Institute, traffic congestion cost the US $166 billion in wasted time and fuel in 2019, which can affect productivity, quality of life, and economic growth.

By driving less and using alternative modes of transportation, drivers can reduce their environmental impact and traffic congestion. For example, according to Metromile, its customers reduced their driving by 40% after switching to pay-per-mile car insurance, which resulted in a 10% reduction in carbon dioxide emissions per customer. Moreover, according to Mile Auto, its customers drove 25% less than the national average after switching to pay-per-mile car insurance, which resulted in a 6.5% reduction in vehicle miles traveled per customer.

Some pay-per-mile car insurance providers also offer incentives and rewards to drivers who drive less or greener. For example, Metromile offers a low-mileage discount that can save drivers up to an additional 40% on their premium if they drive less than 2,500 miles per year. Moreover, Metromile also offers a carbon offset program that allows drivers to donate a portion of their savings to environmental causes. Similarly, Allstate Milewise offers a daily trip cap that limits the amount of miles drivers are charged for each day, regardless of how much they drive. For example, if the daily trip cap is 250 miles and a driver drives 300 miles in one day, they will only be charged for 250 miles.

Benefit 3: Enjoy Flexible and Customizable Coverage

Another benefit of pay-per-mile car insurance is that it can offer flexible and customizable coverage options that suit different drivers’ needs and preferences. With pay-per-mile car insurance, drivers can choose their base rate, per-mile rate, deductible, coverage level, and add-ons with more control and transparency than traditional car insurance.

For example, with Metromile, drivers can adjust their base rate and per-mile rate by choosing their deductible from $250 to $1,000. They can also choose their coverage level from state minimum to full coverage. They can also add optional features such as roadside assistance, rental reimbursement, and pet injury protection. They can also view their projected monthly bill and see how their driving affects their premium.

Similarly, with Mile Auto, drivers can adjust their base rate and per-mile rate by choosing their deductible from $250 to $2,500. They can also choose their coverage level from liability-only to full coverage. They can also add optional features such as uninsured/underinsured motorist coverage, medical payments coverage, and personal injury protection. They can also view their monthly bill and see how their mileage affects their premium.

With pay-per-mile car insurance, drivers can enjoy more flexibility and customization than traditional car insurance. However, they should also be aware of some of the drawbacks of having flexible and customizable coverage, such as variability, unpredictability, and potential overpaying. For example, if drivers drive more than expected or have a sudden increase in their mileage, they might end up paying more than they would with traditional car insurance. Moreover, if drivers have a low base rate and a high per-mile rate, they might overpay for their coverage if they don’t drive at all or very little.

Therefore, drivers should carefully consider their driving habits and patterns before choosing pay-per-mile car insurance and compare it with traditional car insurance to see which option is more suitable and cost-effective for them.

Benefit 4: Access Smart Technology and Features

Another benefit of pay-per-mile car insurance is that it can leverage smart technology and features to enhance drivers’ experience and safety. With pay-per-mile car insurance, drivers can use devices or apps that track their mileage, monitor their driving habits, provide trip insights, access roadside assistance, file claims, and more.

For example, with Metromile, drivers can use a device called the Pulse that plugs into their vehicle’s diagnostic port and connects to an app on their smartphone. The Pulse and the app can track the mileage and send it to Metromile for billing purposes. They can also monitor the driving habits and provide feedback and tips on how to improve them. They can also provide trip insights such as routes, time, speed, fuel efficiency, etc. They can also access roadside assistance services such as towing, battery jumpstart, flat tire change, etc. They can also file claims online or through the app and get them resolved quickly and easily.

Similarly, with Allstate Milewise, drivers can use a device called the Allstate Plug-in Device that plugs into their vehicle’s diagnostic port and connects to an app on their smartphone. The device and the app can track the mileage and send it to Allstate for billing purposes. They can also monitor the driving habits and provide feedback and tips on how to improve them. They can also provide trip insights such as routes, time, speed, fuel efficiency, etc. They can also access roadside assistance services such as towing, battery jumpstart, flat tire change, etc. They can also file claims online or through the app and get them resolved quickly and easily.

With pay-per-mile car insurance, drivers can access smart technology and features that can enhance their experience and safety. However, they should also be aware of some of the challenges and risks of using smart technology and features, such as accuracy, security, and privacy. For example, if the device or the app malfunctions or fails to record the mileage correctly, drivers might be charged incorrectly or unfairly. Moreover, if the device or the app is hacked or stolen, drivers might lose their personal or financial information or face identity theft or fraud.

Therefore, drivers should make sure that they use reliable and trustworthy devices and apps that have proper security and privacy measures in place. They should also check their bills regularly and report any errors or discrepancies as soon as possible.

Conclusion

Pay-per-mile car insurance is an innovative and alternative option for drivers who drive less than average. It can offer many benefits, such as saving money on car insurance premiums, reducing environmental impact and traffic congestion, enjoying flexible and customizable coverage, and accessing smart technology and features. However, it can also have some drawbacks, such as variability, unpredictability, potential overpaying, accuracy issues, security risks, and privacy concerns.

If you are a driver who drives less than average, you might want to consider switching to pay-per-mile car insurance or compare quotes from different providers to see if it is a better option for you than traditional car insurance. You might be surprised by how much money you can save and how much value you can get with pay-per-mile car insurance.

We hope you found this article helpful and informative. If you have any questions or comments, please feel free to contact us. We would love to hear from you. Thank you for reading and happy driving!