Pay Per Mile Car Insurance
As an independent insurance agent with Blake Insurance Group, I’ve seen firsthand how the auto insurance landscape has evolved. Pay-per-mile car insurance is one of the most exciting developments I’ve enjoyed introducing to my clients. This innovative approach to coverage has been a game-changer for many drivers, especially in states like Arizona, Florida, Georgia, and Texas.
Pay-per-mile insurance isn’t just another industry buzzword – it’s a practical solution that’s helping many of my clients save money without sacrificing protection. I’ve had countless conversations with folks who were skeptical at first but thrilled with their switch to a pay-per-mile policy.
In my experience, this type of coverage works particularly well for people who don’t rack up many miles on their odometer. Whether you’re working from home, retired, or just don’t drive much, pay-per-mile could be the key to unlocking significant savings on your auto insurance.
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I know insurance can be a dry topic, but stick with me. I will break down everything you need to know about pay-per-mile insurance in a way that’s easy to understand. We’ll cover how it works, who it’s best for, and what options are available in your area. By the end of this article, you’ll have a clear picture of whether pay-per-mile might be the right choice for you.
So, let’s explore this innovative insurance option that’s changing the game for drivers across the country.
How Does Pay Per Mile Insurance Work?
Mileage Tracking
The cornerstone of pay-per-mile insurance is accurate mileage tracking. Insurance companies use a few different methods to measure how far you drive:
– Telematics devices: Most insurers provide a small device that plugs into your car’s OBD-II port (usually located under the dashboard). This device automatically tracks and reports your mileage.
– Smartphone apps: Some companies offer mobile apps that use your phone’s GPS to track miles driven.
– Odometer readings: A few insurers, like Mile Auto, simply ask you to submit a photo of your odometer each month.
Premium Calculation
Your monthly premium is typically calculated using two components:
Base rate: This fixed monthly fee covers things like your demographics, driving history, and vehicle type. It’s similar to how traditional auto insurance is priced.
Per-mile rate: This is a small charge (usually a few cents) for each mile you drive.
Your total monthly bill is then:
Base Rate + (Per-Mile Rate x Miles Driven)
For example, if your base rate is $30 per month and your per-mile rate is $0.06, driving 500 miles monthly would result in a premium of $60 ($30 + $0.06 x 500).
Mileage Caps
Many insurers place a daily mileage cap (often around 250 miles) to protect you from excessive charges on long road trips.
Billing and Management
Most pay-per-mile programs offer user-friendly apps or online portals where you can:
– View your current mileage
– Check your estimated monthly bill
– Access policy documents
– Report claims
In my experience, clients who drive less than 7,000-8,000 miles per year often see significant savings with pay-per-mile policies compared to traditional auto insurance. However, it’s always worth running the numbers for your situation to determine if it fits.
Who Benefits Most from Pay Per Mile Insurance?
Let me break down who typically benefits the most from this innovative coverage option:
Remote Workers
With more people working from home, many of my clients have found significant savings with pay-per-mile policies. If you’re not commuting daily, you’re likely putting far fewer miles on your car. Clients cut their premiums by 30-40% after switching to pay-per-mile.
Retirees
Many of my retired clients have embraced pay-per-mile insurance. When you’re no longer driving to work every day, your mileage often drops dramatically. I’ve helped several retirees save hundreds of dollars annually by switching to a mileage-based policy that better reflects their new lifestyle.
Urban Dwellers
If you live in a city like Atlanta or Miami, where public transit is readily available, you might only use your car for occasional trips. Pay-per-mile can be a great fit in these cases. I’ve had urban clients save up to 50% compared to their old traditional policies.
College Students
Pay-per-mile is often a no-brainer for students who leave their car at home while at school. I’ve helped many parents set up policies that only charge for the miles driven during breaks and holidays, resulting in substantial savings.
Occasional Drivers
Some of my clients own a second or third vehicle that doesn’t see much use. Maybe it’s a sports car for weekend drives or an old truck for occasional hauling. Pay-per-mile often makes more financial sense than a standard policy in these cases.
Environmentally Conscious Drivers
Pay-per-mile insurance provides a financial incentive to drive less for clients trying to reduce their carbon footprint. It’s a win-win – you save money and help the environment.
Remember, the sweet spot for pay-per-mile is typically driving less than 7,000-8,000 miles yearly. If you fall into one of these categories and aren’t driving much, it’s definitely worth exploring this option. As always, I’m happy to run the numbers and see if it makes sense for your situation.
Coverage Options and Add-Ons
Standard Coverage Options
Despite the unique pricing structure, pay-per-mile policies generally offer the same core coverages as traditional auto insurance:
Liability coverage is the foundation of any auto policy, covering damage or injuries you cause to others. It’s required in most states.
– Collision coverage: This protects your vehicle if you’re in an accident, regardless of fault.
– Comprehensive coverage covers non-collision incidents like theft, vandalism, or weather damage.
In my experience, most pay-per-mile insurers allow you to customize your coverage limits just like with a traditional policy. This flexibility is great for tailoring protection to your specific needs.
Additional Protection Options
Many of my clients are pleased to learn that pay-per-mile policies often include options for extra coverage:
– Uninsured/underinsured motorist protection: This is crucial if a driver hits you without adequate insurance.
– Personal injury protection (PIP) or medical payments coverage: These help cover medical expenses for you and your passengers after an accident.
– Rental car reimbursement: This can be a lifesaver if your car is in the shop after a covered incident.
– Roadside assistance: I always recommend this for peace of mind, especially for older vehicles.
Unique Add-Ons
Some pay-per-mile insurers offer specialized add-ons that can provide extra value:
– Pet injury coverage: For clients who often travel with furry friends, this can help cover vet bills if your pet is injured in a car accident.
– Rideshare coverage: If you occasionally drive for Uber or Lyft, some insurers offer hybrid policies that combine pay-per-mile with rideshare protection.
– Diminishing deductible: With some companies, your deductible decreases if you maintain a clean driving record.
Remember, available coverages can vary by state and insurer. When I’m helping a client set up a pay-per-mile policy, we always review their specific needs and situations to ensure they’re getting the right mix of coverage. It’s about finding that sweet spot between adequate protection and cost savings.
Comparing Costs: Pay Per Mile vs. Traditional Car Insurance
Let me break down some real-world scenarios to illustrate the potential savings:
Low-Mileage Commuter
Let’s consider Sarah, a 35-year-old who works from home and only drives about 5,000 miles per year:
Traditional policy: $1,200 annually
Pay-per-mile:
– Base rate: $40/month ($480/year)
– Per-mile rate: $0.06 x 5,000 miles = $300/year
– Total: $780/year
**Savings: $420 annually (35%)**
Retiree with Occasional Use
Now, let’s look at Bob, a 68-year-old retiree who drives about 3,000 miles per year:
Traditional policy: $1,000 annually
Pay-per-mile:
– Base rate: $35/month ($420/year)
– Per-mile rate: $0.07 x 3,000 miles = $210/year
– Total: $630/year
**Savings: $370 annually (37%)**
Urban Dweller with Weekend Use
Consider Emma, a 28-year-old living in Atlanta who primarily uses public transit but drives about 4,000 miles per year:
Traditional policy: $1,500 annually
Pay-per-mile:
– Base rate: $45/month ($540/year)
– Per-mile rate: $0.08 x 4,000 miles = $320/year
– Total: $860/year
**Savings: $640 annually (43%)**
Break-Even Point
It’s important to note that there’s a break-even point where pay-per-mile becomes more expensive than traditional insurance. For example, using the rates from Sarah’s scenario:
Break-even mileage: (1200 – 480) / 0.06 = 12,000 miles
This means a traditional policy would be cheaper if Sarah drove more than 12,000 miles per year.
In my experience, pay-per-mile insurance typically offers the most savings for those driving less than 7,000-8,000 miles per year. However, some companies like Metromile claim average savings of 47% compared to traditional policies.
Remember, these are just examples, and actual rates can vary based on factors like driving history, location, and vehicle type. It’s always best to get personalized quotes to compare your options accurately. As your agent, I’d be happy to run the numbers for your specific situation and help you determine which option makes the most financial sense for you.
some of the main companies offering this type of coverage
Major Insurers with Pay-Per-Mile Programs
Allstate Milewise
Allstate’s pay-per-mile program is available in several states, including Arizona, Florida, Georgia, and Texas. It uses a plug-in device to track mileage and offers the same coverage options as traditional Allstate policies.
Nationwide SmartMiles
Available in most states, Nationwide’s program also uses a plug-in device. It offers a base and per-mile rate and a potential safe driving discount.
Liberty Mutual ByMile
While not as widely available, Liberty Mutual’s program is expanding to more states. It offers similar features to other major insurers’ pay-per-mile options.
Specialized Pay-Per-Mile Insurers
Metromile
One of the pioneers in pay-per-mile insurance, Metromile is available in eight states, including Arizona, California, and Illinois. It uses a plug-in device called the Pulse to track mileage.
Mile Auto
This company takes a unique approach, requiring customers to submit monthly odometer photos rather than using a tracking device. It’s available in several states, including Arizona, Georgia, and Texas.
Just Auto Insurance
Currently only available in Arizona, Just Auto offers pay-per-mile coverage with some unique features tailored for low-mileage drivers.
Root
Root offers a Pay Per Mile option in certain states. Root’s program uses a mobile app for mileage tracking and is geared toward drivers who also want to benefit from usage-based rates based on driving behavior.
Common Questions About Pay Per Mile Car Insurance
Pay Per Mile insurance combines a base monthly rate with a charge for each mile you drive. Typically, a tracking device or app records your mileage, and your monthly premium adjusts based on how much you drive.
For low-mileage drivers, Pay Per Mile insurance can be more affordable than traditional insurance since you’re only paying based on how much you drive. However, high-mileage drivers may find it less economical, as costs increase with more miles.
Most policies charge a set rate per mile, so you’ll simply pay a bit more if you drive extra miles one month. Some companies even cap the number of miles charged per day or month, offering some predictability in cost.
Mileage tracking varies by company. Some use a plug-in device for your car, while others use a mobile app or require you to upload photos of your odometer periodically. Tracking methods are generally straightforward and designed to be user-friendly.
Depending on the company, you may have a daily or monthly cap on miles that prevents excessive charges from long trips. This feature is helpful for occasional road trips, as you won’t be penalized for rare instances of high mileage.
Coverage options are similar to traditional car insurance, including liability, collision, comprehensive, and personal injury protection. You can select coverage levels based on your needs, just as with a standard policy.
Some pay-per-mile insurers only track mileage, while others may also monitor driving behaviors, such as braking, acceleration, and speed. Be sure to ask your provider if they use behavior tracking, as it could impact your rates.
You can typically switch to Pay Per Mile insurance at any time. The process is similar to switching traditional policies, but you may need to cancel your previous policy and possibly receive a refund for unused premiums.
Yes, most providers allow flexibility in switching between plans. If your driving habits change, you can explore returning to a traditional policy to avoid higher per-mile costs.
Blake Nwosu
Owner & Principal Agent
Blake Insurance Group
Phone: (888) 387-3687
Email: [email protected]
Hours: Mon-Fri 9:00 am to 5:00 pm
Sat-Sun: Closed