Not everyone drives enough to justify high insurance costs. If you work from home, own multiple cars, or only drive on weekends, pay-per-mile insurance might be the money-saving option you’ve been looking for.
Traditional insurance assumes everyone drives about the same amount each year, but pay-per-mile policies flip that idea. You only pay for what you drive. Let’s look at how this works, its advantages, drawbacks, and whether it’s a smart choice for you in 2025.
How Pay-Per-Mile Insurance Works
Pay-per-mile insurance combines a base rate (a fixed monthly fee) with a per-mile charge. Insurers use a small device or app to track your mileage. Each month, you’re billed for the exact miles you’ve driven.
For example, if your base rate is $40 and you drive 500 miles at 5 cents per mile, your total bill would be $65.
Popular providers like Metromile, Nationwide SmartMiles, and Allstate Milewise offer this model in several U.S. states.
Who Benefits the Most
This model isn’t for everyone, but it’s ideal for:
- Remote workers or freelancers
- Retirees who drive occasionally
- Families with multiple vehicles
- People living in walkable cities
- Drivers who use public transportation regularly
If you drive fewer than 7,500 miles per year, you’ll likely see noticeable savings compared to a traditional policy.
The Pros of Pay-Per-Mile Insurance
- You only pay for what you use: Perfect for low-mileage drivers.
- Increased transparency: You can track your costs in real time.
- Potentially big savings: Many customers report saving 20–40% annually.
- Environmental benefit: Encourages less driving, reducing emissions.
- Modern tech: Apps show mileage, billing, and policy updates instantly.
The Cons to Consider
- Not ideal for long commuters: If you drive more than 10,000 miles per year, traditional insurance may be cheaper.
- Limited availability: Not all states or insurers offer it yet.
- Privacy concerns: Mileage tracking means insurers collect location data.
- Price variability: Monthly costs fluctuate depending on your travel habits.
How It Affects Your Coverage
Pay-per-mile insurance provides the same protection as a standard policy — liability, comprehensive, and collision coverage — just priced differently. You don’t lose coverage quality; you simply change how it’s billed.
Is It Worth It?
If your car spends more time parked than on the road, yes. Low-mileage drivers can benefit from smaller, more predictable bills. But if you drive long distances, have unpredictable routes, or frequently take road trips, you might end up paying more than expected.
Here’s the Takeaway
Pay-per-mile car insurance is part of the modern shift toward personalized pricing. It’s a smart solution for people who drive less but still want full protection. Before switching, compare both plans side by side for a few months. The best choice depends on your lifestyle, mileage, and how much flexibility you want with your monthly payments.