Glossary

Pay-per-mile insurance

A policy priced as a monthly base rate plus a few cents for each mile driven, tracked by an app, plug-in device or the car itself.

Also called: per-mile insurance, mileage-based insurance, pay-as-you-drive insurance

Pay-per-mile insurance charges you according to how much you actually drive. Instead of a fixed premium based on estimated annual mileage, you pay a monthly base rate plus a per-mile rate, with miles measured by a plug-in device, the car's connected services or a smartphone app. It is one form of usage-based insurance.

The formula: monthly cost = base rate + (miles driven × per-mile rate). Say the base rate is $45 and the per-mile rate is 7 cents. Drive 400 miles in a month and you pay $45 + $28 = $73; drive 1,200 miles and you pay $45 + $84 = $129 (hypothetical figures). Some programs cap the miles charged in a single day, so one road trip does not blow up the bill. Both rates still reflect your driving record, car and location.

It tends to save money for people who drive well below average: remote workers, retirees, city dwellers who mostly walk or take transit, and households with a little-used second car. High-mileage drivers usually do better with a traditional policy. Availability varies by insurer and state; Nationwide's SmartMiles, for example, was not sold in Alaska, Hawaii, Louisiana, Michigan, North Carolina, New York or Oklahoma as of October 2026. The pay-per-mile break-even calculator finds your break-even mileage. See pay-per-mile car insurance: how the pricing works.

Last reviewed October 4, 2026

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Related terms

Usage-based insurance Car insurance priced partly on how and how much you actually drive, measured by an app, plug-in device or the car's connected services. Telematics Technology that records how, when and how much a car is driven, through an app, plug-in device or the car itself, so insurers can price on behavior. Annual mileage How many miles a car is driven in a year, a rating factor because more time on the road means more chances of a claim. Premium The amount you pay for an insurance policy over its term, built from the insurer's rate, your rating factors, coverage choices and discounts. Pleasure use A vehicle-use rating class for cars driven for errands and recreation, not for a regular commute to work or school or for business.

Related guides

Digital-first car insurers: how the insurtechs work How app-based car insurers price, sell and pay claims, the difference between a digital carrier, a program brand and an agency, and what to check before buying. Low-mileage discounts: how insurers reward driving less How insurers price low annual mileage, the difference between a mileage discount, telematics and pay-per-mile, how mileage is verified, and who saves most. Pay-per-mile car insurance: how the pricing works How pay-per-mile car insurance bills a base rate plus cents per mile, which major insurers offer it, how to find your break-even mileage, and its trade-offs. Telematics programs from the major insurers compared Side-by-side comparison of the big insurers' telematics programs: current names, how each collects data, and whether your rate can go up. Checked October 2026. Usage-based car insurance explained How usage-based car insurance measures your driving or mileage, what it can do to your premium, the three main types of program, and who tends to benefit.

Related insurers

Allstate Publicly traded "Good Hands" insurer sold by exclusive agents, online and by phone, and owner of National General; offers Drivewise and pay-per-mile Milewise. Lemonade A New York app-based insurer selling car insurance priced partly on mileage and phone telematics in 12 states; owner of pay-per-mile pioneer Metromile. Markel A Virginia specialty insurer whose auto premium comes mostly from Hagerty's collector-car policies, which its Essentia unit issues and since 2026 fronts. Metromile The San Francisco pay-per-mile car insurer Lemonade bought in 2022; its brand is being retired, and Metromile Insurance Company now issues Lemonade policies. Mile Auto An Atlanta managing general agent selling pay-per-mile car insurance that tracks mileage from monthly odometer photos instead of a device, in nine states. Nationwide Columbus, Ohio mutual founded by the Ohio Farm Bureau in 1926, now sold through independent agents and known for SmartRide and SmartMiles.

Related tools

Pay-per-mile break-even calculator Find the monthly mileage at which a pay-per-mile policy costs the same as a traditional one, using the base rate and per-mile rate from real quotes.