Pay per mile is usage-based vehicle insurance - your premium depends on the mileage you rack up every month. Note that it differs slightly from “pay how you drive” insurance which adjusts your premium depending on your driving habits (such as whether you regularly speed or stomp on the brakes). Several carriers now offer pay per mile insurance. It’s usually implemented with a wireless device that connects to a car’s OBD-II port, which can be found in all cars built after 1996.
The device communicates with the insurer to report the miles you drive. It might optionally report other information, such as location, but you might be able to defeat the extra functionality. The insurer calculates your month’s premium based on the miles you drive and the coverage options you’ve chosen. Below you can see major U.S. providers of pay per mile insurance.
Metromile is a startup company funded by National General Insurance and several other investors. Its pay per mile app uses an OBD-II device that reports miles driven. It also comes with GPS tracking, but you can opt out if you’d rather not share that information. Billing is a combination of base and per-mile rates that depend on factors such as the vehicle type, driver age and history, credit score and length of prior insurance.
The per-mile rate varies from 2 to 11 cents, and the base rate starts at $29/month. You pay for each mile you drive up to the daily limit (250 in most states, 150 in New Jersey). Once you exceed the daily limit, the remaining miles are free. Metromile offers a multi-car discount that saves on both the base and per-mile rates. The first month’s payment consists of your base rate and any required prepayment. For subsequent months, you pay the base rate plus the per-mile rate for any miles driven in the previous month. Billing is automatic.
Its pay per mile product is similar, but not identical, to Milewise. Esurance pay per mile was introduced in 2015 and operates in Oregon. The daily mileage charge is capped at 150 miles. The biggest difference from Milewise is that Esurance bills monthly rather than by trip. The Esurance device records mileage and location.
This product uses a low-tech method to count your miles. Every month, you snap a photo of your odometer and send it in. You’ll be billed on the miles you’ve driven, without any extraneous data. That’s a plus for privacy-minded drivers. The insurance is currently available in Oregon and Illinois. It claims to save as much as 40% over conventional insurance. Mile Auto charges a monthly base rate and a per-mile fee. The base rate depends on the standard insurance variables.