Have You Heard of Pay-Per-Mile Car Insurance?

Have You Heard of Pay-Per-Mile Car Insurance - picture of white car driving with speed blur in foreground

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The following is a paid review sponsored by Metromile.

We’ve always worked within a few miles of our home. We we had “real” jobs, our short 10 minute commute was nice, and it never put too many miles on the car. Plus, working together meant that we were able to car pool. Bonus!

Now that we work at home, our driving is practically non-existent. Every morning, I drive about 6 blocks to drop off our daughter at preschool. Our neighborhood is less than 5 minutes from both the grocery store and all the major retailers. So, if we need anything at all, it doesn’t take long to get there.

Though we still have 2 cars, one of them sits in the garage practically full-time. And, while we do get a low-mileage discount on our auto insurance, we still shop around each year to make sure that we’re getting the best deal. That’s how we found Metromile, a pay-per-mile car insurance company that is poised to interrupt the marketplace.

Why Metromile?

According to Metromile, traditional car insurance pricing isn’t fair, with low-mileage drivers are getting the short end of the stick. They claim the biggest indicator for risk is the amount of time a car spends on the road. As such, Metromile states that 65% of drivers pay higher rates than they should. Those funds are then used by traditional insurance companies to subsidize those putting more miles on their car.

That’s why Metromile has developed a system where drivers pay insurance premiums based on how much they actually use their car. The less you drive, the less you pay. It’s an interesting concept, and one that’s worth exploring further.

How It Works

When you insure with Metromile, you’ll be charged a monthly “base rate” plus mileage. Rates are based on several factors – including your driving history, make and model of the car, and your age. Once the rate is set, pricing is straight forward.

For example, let’s assume you secure a base rate of $35/month with per mile rate of 3.2¢. So, if you drive 750 miles this month, your bill would look like this:

$35 base rate + (3.2¢ x 750 miles) = $59 total

Now, if you only drove 500 miles the next month, you’d save even more:

$35 base rate + (3.2¢ x 500 miles) = $51 total

Easy peasy.

But, what if you’re taking a long trip? Wouldn’t your mileage premium add up quickly?

Not quite. Your daily mileage allotment is capped at 150 miles a day. So, while your car will be covered on your 400 mile trip, you’ll pay for only 150 miles that day!

Of course, if you’re paying by mile, there has to be a reliable way to track how much you are driving, right? Like other traditional companies who offer discounts for “good driving” habits, Metromile uses a wireless device that fits in your car’s diagnostic port. Unlike traditional companies who may punish you for undesirable and sometimes suspect actions (braking incidents, anyone?), Metromile actually rewards you for driving less. No punishment, just recording your miles.

Even better, the device is actually designed to help you. Their mobile app, in connection with your device, helps optimize your trips, monitor your car’s health, and remember where you parked. In certain cities, it will even send you street sweeping alerts to help you avoid costly parking tickets. Pretty sweet, right?

Types of Coverage

As with traditional car insurance, Metromile has several different levels of insurance coverage available. Comprehensive coverage, collision, bodily injury, property damage, uninsured and underinsured motorist, personal injury protection (PIP)/medical payments (MedPay), and more are available. They also offer glass coverage and 24-hour emergency roadside assistance.

If you travel a lot, like we do, you probably rent a car from time to time. With Metromile, you’re still covered. There is no need to insert the device into the rental car, and you are not charged for any miles driven in your rental vehicle.

Where Is It Available?

While Metromile is growing, it is currently available in a limited number of states. Unfortunately, they haven’t made it to our area yet. However, if you live in California, Washington, Oregon, Illinois, Pennsylvania, New Jersey, or Virginia, Metromile may be right for you. If not, you can still visit their website for a quote and join the waiting list so you’ll be ready to go when they make it to your area.

Will You Save Money with Metromile?

So, it’s time for the million dollar question: Will you save money? According to their website, Metromile claims an average yearly savings of between $424 and $537  for motorists driving 8,000 miles or less. A multi-car discount is also available. That’s a nice chunk of change which can be used to help bolster your other savings goals.

Pay-per-mile insurance is a great option for motorists who don’t drive much. And, once Metromile makes it to our area, I’m definitely going to give it a good look.

To find out if Metromile is right for you, you can visit their website by clicking here.

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  1. Huh, this is a good idea! We’re similar to how your family used to be (2 cars, yet we both commute to work together, along with dropping off our son at daycare). Our 2nd car sits in the garage most of the time with a few days here and there our jobs require us to drive separately. We’ll look forward to the service coming to North Carolina and give it a look. Thanks!

    The Green Swan

  2. Interesting! We are sporadic on our driving habits, but do tend to rack up the miles during the summer. Doing the math, it looks slightly cheaper than our current plan, but we have a teen driver (and another in less than a year) – I wonder if they have a higher per mile rate for teens?

  3. I don’t have a car, but this is an interesting concept. If I did get a car, I would mainly use it during the weekends and occasionally during the week – so this would likely save me money. Who knows – I might be a customer one day. 🙂

  4. Pretty neat idea, and a service that might be tailor made for the personal finance community, who probably drive way less than the average driver.

  5. thankful in pdx says:

    The review begins “The following is a paid review sponsored by Metromile.” Thank you for your honesty. It saved me from having to read any further.

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