Pay-Per-Mile Auto Insurance: What’s That?

As you may have guessed from the name, pay-per-mile auto insurance is different from a regular policy. Rather than a predetermined amount at set intervals, your premium is based on the number of miles you actually drive each month.

Insurance companies offer pay-per-mile auto insurance because people who don’t drive as much as others don’t incur as much risk statistically. Why should they pay the same rates as people who drive hundreds or thousands of miles per month?

Who Uses Pay-Per-Mile Auto Insurance?

This type of auto insurance coverage is ideal for people who routinely spend less time in the driver’s seat, or motorists who drive less than 6,000 to 10,000 miles per year. Who typically fits into that category?

• Seniors and retirees
• Stay-at-home parents
• Students
• People who live close to work
• Drivers who frequently opt for public transportation or who walk or bike to their destinations
• People who work from home
• Car owners who have an extra vehicle they don’t drive much

You may find pay-per-mile auto insurance works for you right now, since many people are working from home and restricting their activities during the coronavirus pandemic. 

How Does Pay-Per-Mile Insurance Work?

Pay-per-mile auto insurance works quite simply. You pay a base rate that, like regular auto insurance, is determined by your age, vehicle, location, driving history, and any prior insurance claims. After that, you pay by the mile, usually at a rate of a few cents per mile.

How does the insurance carrier know how far you’ve driven? Usually, a device that tracks miles for you (AKA telematics) is plugged into your car. Sometimes, an app is used where you upload images of your vehicle’s odometer.

What Else Is Important to Know about Pay-Per-Mile Insurance?

Pay-per-mile auto insurance can offer you significant savings over regular plans if you don’t drive much or are temporarily limiting your driving. Different plans are available in each state, and as described above, rates can vary based on your personal history.

You can still get full coverage with a pay-per-mile policy. There’s no need to sacrifice collision or comprehensive coverage in order to save money.

What if you want to take a trip? Most pay-per-mile insurance plans understand that you occasionally need to drive longer distances, whether for work meetings or vacation. Many put a cap on the number of miles you are charged on one day, such as all miles over 250 per day are free.

Want to see if pay-per-mile auto insurance is right for you? Call Davidson & Associates Insurance at 360-514-9550, or get in touch online for more information. Our independent agents have dozens of auto insurance products available for our Washington drivers. We’ll make sure you get a policy that gives you the coverage you need within your budget.