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Home > Blog > What Is Pay Per Mile Auto Insurance?
THURSDAY, AUGUST 9, 2018

What Is Pay Per Mile Auto Insurance?

You may hear more about pay per mile auto insurance. It is a somewhat newer type of car insurance some insurers are offering. This is not new coverage. Rather, it is a new pricing method. In some situations, it is ideal. It can help to reduce how much money many people payimage of empty road for their coverage. How does it work?

Individuals pay insurance costs based on how much they drive. As a newer policy type, not all providers offer pay per mile coverage yet. However, some vehicle owners appreciate it.

How Does Pay Per Mile Work?

Traditional insurance policies place a cost on your auto insurance based on risk. To determine risk, insurers use many factors. This includes things like your previous driving record and where you live.

With pay per mile auto insurance, the focus is on how much you drive. The premise is that if you drive more, you are more likely to get into an accident than someone who drives little. Driving less, then, should cost you less. Many of these insurance providers allow for this. For those who do not drive often, this is a very good way to save money.

To work, most insurance agencies offering pay per mile will use a sensor. There are various types. Most are wireless devices placed in the vehicle. They track how much you drive. Some companies go further. They offer a device that also tracks how well you drive. Other companies use these devices as well but may not have the same pricing strategy as a pay per mile company does.

If you think you may wish to try this type of car insurance, your first step is to determine how frequently you drive. In a true pay per mile service, each mile costs you a few cents. Rates change based on the insurer. Most policies also have a base rate. This may be a service fee, for example. Others charge a starting rate. From there, if you go above a certain mileage, you will pay more.

You may wish to choose this type of car insurance policy in several situations. First, discuss low mileage discounts from your current auto insurance company. If you drive under 12,000 miles a year, these may be best. If you drive a car less than this - even just a few thousand miles per year, you may want to consider pay per mile instead. Compare options with both agencies offering low mileage discounts and pay as you go coverage. Discuss the pricing difference with an agency carefully.

Also Read: Why Some State Laws Restrict How Many People Teens Can Drive

Posted 5:54 AM

Tags: car insurance
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