As the name suggests, pay as you go car insurance is a type of insurance policy that allows you to pay for the coverage you need based on how much you drive. Unlike traditional car insurance policies, where you pay a fixed premium amount regardless of how much or how little you use your car, pay as you go auto insurance can help you save money if you drive infrequently.
If you’re someone who drives only occasionally or for short distances, pay-per-mile insurance can be a smart and cost-effective option. Here’s everything you need to know about pay as you go car insurance, including how it works, how much it costs, which companies offer it, and whether it’s right for you.
What is Pay As You Go Car Insurance?
Pay as you go car insurance, also known as usage-based insurance or pay-per-mile insurance, is a type of auto insurance policy that lets you pay for your coverage based on how much you drive. This type of insurance is becoming increasingly popular among drivers who want to save money on their car insurance premiums and who use their cars infrequently.
With pay as you drive car insurance, you’ll typically pay a base rate each month, which covers your vehicle while it’s parked or not in use. Then, you’ll pay an additional amount per mile for the miles you drive each month. The per-mile rate can vary depending on factors like your driving history, your car’s age and make, and your location.
How Does Pay As You Go Auto Insurance Work?
When you sign up for pay as you go car insurance, you’ll typically be given a device to install in your car that tracks your driving habits and records the miles you drive. The device can be a small plugin that goes into your car’s diagnostic port, or it can be an app on your smartphone that uses GPS to track your mileage.
Once the device is installed, it will track your driving habits, including your mileage, speed, and braking patterns. The information is then used to calculate your insurance premium for the month.
Some of the best pay as you go car insurance providers may also offer additional discounts or rewards for good driving habits, such as avoiding hard braking or driving during off-peak hours.
How Much Does Pay As You Go Car Insurance Cost?
The cost of pay as you go car insurance varies depending on the provider, the coverage you need, and the number of miles you drive each month. Generally, the base rate for pay as you go car insurance is lower than traditional car insurance policies, but the per-mile rate can be higher.
That’s why if you only drive your car a few hundred miles per month, you may pay less for pay as you go car insurance than you would for a traditional policy. However, if you drive a lot, the per-mile rate can add up quickly, making pay as you go car insurance more expensive than a traditional policy.
Pay As You Go Insurance Companies
Several insurance providers offer pay as you go car insurance, including major players like Progressive, Allstate, and Metromile. Other providers, such as Metromile, Mile Auto, Nationwide SmartMiles, and Root, specialize in pay as you go car insurance exclusively.
When shopping for the best pay as you go car insurance, it’s important to compare quotes from multiple providers to find the best coverage and rates for your needs.
How To Find the Best Pay As You Go Car Insurance for You
To find the best pay as you go auto insurance for you, start by considering your driving habits and insurance needs. Here are some tips to help you find the right policy:
- Research different providers: Take the time to research different pay as you go car insurance providers to find the best coverage and rates for your needs.
- Compare quotes: Get quotes from multiple providers to compare prices and coverage options.
- Consider your driving habits: If you drive frequently or for long distances, a pay as you go car insurance policy may not be the most cost-effective option for you. However, if you only drive occasionally, pay as you go insurance car could be a great way to save money.
- Check for additional discounts: Some pay-per-mile car insurance providers offer additional discounts or rewards for good driving habits, such as avoiding hard braking or driving during off-peak hours. Make sure to ask about these discounts when shopping for coverage.
- Read reviews: Before choosing a pay as you go car insurance provider, read reviews from other customers to get a sense of their experiences with the company.
Pros and Cons of Pay As You Go Auto Insurance
As with any type of insurance policy, pay as you go car insurance has its pros and cons. Here are some of the advantages and disadvantages of pay as you go auto insurance:
Pros:
- Cost-effective: Pay as you go car insurance can be a cost-effective option for drivers who only use their cars occasionally or for short distances.
- Rewards good driving habits: Some pay as you go car insurance providers offer additional discounts or rewards for good driving habits, which can encourage safer driving.
- Flexibility: Pay as you go car insurance policies can be more flexible than traditional insurance policies, allowing you to adjust your coverage as needed.
Cons:
- Per-mile rates can add up: If you drive frequently or for long distances, the per-mile rate can add up quickly, making it more expensive than a traditional policy.
- Requires device installation: To track your driving habits and calculate your premiums, pay as you go car insurance policies typically require you to install a device in your car, which can be inconvenient.
- Limited options: Not all insurance providers offer usage-based car insurance, so your options may be limited when shopping for coverage.
Who Should Use Car Insurance Pay As You Go?
Pay as you go car insurance is an ideal option for people who drive infrequently or for short distances. For example, if you work from home, take public transportation to work, or only use your car for errands and short trips, pay as you go car insurance could be a cost-effective solution for your insurance needs.
Additionally, pay as you go car insurance may be a good option for younger drivers or drivers with a history of accidents or traffic violations, as some providers offer additional discounts for good driving habits.
Can You Save with Pay As You Go Insurance?
Whether or not you can save money with pay per mile car insurance depends on your driving habits and the provider you choose. If you only drive a few hundred miles per month, pay-per-mile car insurance can be a cost-effective option, as the base rate is typically lower than traditional insurance policies. However, if you drive frequently or for long distances, the per-mile rate can add up quickly, making pay as you go car insurance more expensive than a traditional policy.
Final Thoughts on Pay as you Go Insurance for Car
Pay as you go car insurance can be a great option for drivers who use their cars infrequently or for short distances. By paying for coverage based on how much you drive, you can save money on your insurance premiums and get the coverage you need without overpaying. When shopping for the best pay as you go car insurance, make sure to compare quotes from multiple providers and read reviews from other customers to find the best coverage and rates for your needs.