Car Insurance by the Mile | Pay-Per-Mile Car Insurance

The average rates for car insurance by the mile are $.50/mile. If you have a backup car that is only driven for emergencies, pay-per-mile car insurance cost could be cheaper and maybe a good fit for that vehicle. Car insurance by the mile is only available in certain states. Compare car insurance quotes against the average cost per mile above by using our FREE tool below.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Sep 13, 2021

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Here's what you need to know...

  • In certain states, you can purchase car insurance plans by the mile
  • If you drive several miles for work, for example, paying for insurance by the mile is not your best option
  • The average cost of insurance is five cents per mile

Some insurance carriers will sell you car insurance by the mile as long as you meet certain criteria.

To the delight of many, the criteria are not the same as with traditional insurance carriers offering standard coverage.

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Car insurance too expensive to afford for many struggling families. If you have more than one vehicle at home or teenagers in the house, you are probably paying around $3,000 per year in coverage, if not more!

Many people are forced to turn to alternative means of transportation or creative ways to save on their current coverage.

For instance, if you have SR-22 or FR-44, you may be interested in buying car insurance by the mile.

Some may not have the luxury of purchasing this type of coverage if they have a long commute to work or have to use their vehicle for work.

What is car insurance by the mile?

Car insurance by the mile is a way of insuring your vehicle that allows you to pay for coverage based on how much you drive. Usually, there will be a base rate you pay each month, like your usual insurance premium but lower, and then a price per mile that will be added to that base rate.

For instance, if your auto insurance company charges $0.05 per mile and you only drive three miles per day, you’d only pay $0.15 per day plus the base rate for the month.

Assuming you never drove more than three miles per day, that would be about 90 miles per month, or about $4.50 for your insurance, plus the monthly base rate.

Mile rates vary from company to company.

This would be a much better deal than a traditional policy for low-mileage drivers, i.e., someone who has a short commute, someone who works from home, or someone who takes public transportation to work.

Most mile insurance programs use a mobile app or plug-in device to track the number of miles you drive, but keep in mind, pay by the mile car insurance is not the same thing as usage-based insurance.

A usage-based insurance program, also called telematics insurance, monitors your driving habits and rewards you with a discount for safe driving behavior.

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Who would be a good candidate for car insurance by the mile?

If you have a second car that sits as a backup just in case your everyday car or truck breaks down, you may want to inquire about a policy that you pay by the mile.

More and more home businesses are cropping up everywhere, which makes these people good candidates for car insurance by the mile as well.

Some people work close to their jobs and are within walking or biking distance to shopping. These kinds of drivers may also benefit from by the mile coverage.

How can you buy car insurance by the mile?

Buying car insurance by the mile only requires a few things:

  • Your location
  • Your age
  • Your vehicle’s make and model

These auto insurers sell coverage plans on different levels or increments.

The carrier takes an odometer reading from you, and they charge you an average of five cents per mile.

The increments start at 1,000, and you can purchase around 6,000 or more, depending on which company you choose.

Your coverage lasts six months before it expires.

Your credit or discounts are not a consideration, nor do you have to worry about your driving record.

Once you have used your covered mileage, you just purchase more coverage. The insurer has its own methods of tracking you; if you purchased 6,000 miles of coverage and went over it, you simply pay for the additional amount.

If you take the occasional road trip, you may have to pay the difference as discussed above, or your provider may not charge you for the extra miles, assuming this is not a regular thing.

High-mileage drivers will get a better deal with traditional auto insurance policies.

Can you buy car insurance by the mile if you have a specialty vehicle?

Specialty car and vehicle owners usually buy specialty coverage for drivers who drive less than 12,000 miles per year.

These drivers are aware of the savings attached to vehicles they only drive on special occasions.

Some of these vehicles include:

There are others that may fit into this category as well.

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Can you buy car insurance by the mile for rentals?

Rental vehicles are usually rented with the offer of high-priced insurance coverage.

Many renters have their own policy that carries a rental car. If you want to purchase by the mile, your coverage is limited.

In Texas, that restriction is 25/50/25 for liability minimums only.

Can you buy car insurance by the mile if you own a dealership?

Since car insurance by the mile is such a new concept, it is not an advertised option for dealerships.

Dealerships have a specific need for more comprehensive coverage as opposed to liability coverage, so this type of coverage may not be readily offered.

Another factor to consider is that dealers get fleet discounts while insurance by the mile does not consider multiple car coverage options.

Can you buy car insurance by the mile anywhere in the country?

Not every auto insurance company has a mile insurance policy available, and those that do limit the availability to certain states such as Texas, Illinois, and California. For instance, Nationwide’s SmartMiles program is available in most states, whereas Allstate’s Milewise program is limited to a handful of states.

If your insurer doesn’t offer this type of insurance policy, you may still be eligible for a low-mileage discount.

Check your insurance provider’s website or call customer service for more information about how pay per mile car insurance works.

If your current provider doesn’t offer insurance discounts or the type of auto policy you want, check rates from other companies. You can probably find cheaper car insurance elsewhere.

Enter your zip code to receive FREE auto insurance quotes from multiple companies today!

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