Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insuran...

Full Bio →

Written by

Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

Full Bio →

Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager Chris Harrigan

UPDATED: Apr 13, 2022

Advertiser Disclosure

It’s all about you. We want to help you make the right car insurance coverage choices.

Advertiser Disclosure: We strive to help you make confident car insurance decisions. Comparison shopping should be easy. We are not affiliated with any one car insurance company and cannot guarantee quotes from any single company.

Our car insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different car insurance companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.

Key takeaways...

  • Pay as you go means paying for a service before it is used
  • Pay as you go is the most customizable way to pay for car insurance
  • Pay as you go car insurance is much like other forms of pay-per-use services we are familiar with

Car insurance companies are always looking for ways to make money and offer their customers new products.

Many car insurance customers are just unhappy with rates based on averages of the actions of all drivers, and they are looking for something more individualized to their driving habits, and a way to save money.

While it may have a different name — the “Snapshot Discount,” for example — looking into usage-based insurance may be an excellent alternative for cash-strapped American drivers.

Enter your zip code into our FREE tool above and compare pay-per-mile insurance instantly!

What is a pay-per-mile program?

Pay as you go car insurance is much like other forms of pay-per-use services we are familiar with.

For instance, pay as you go cell phones are trendy now because you only have to pay for exactly what you use no more, no less. Pay as you go car insurance policies are no different.

Like cell phone plans, which are based on how many minutes you use the phone, car insurance plans are based on how many miles you drive.

Compare Car Insurance Companies

Compare quotes from the top car insurance companies and save

secured lock Secured with SHA-256 Encryption

Compare quotes from the top car insurance companies and save

secured lock Secured with SHA-256 Encryption

How do car insurance companies determine a pay-per-mile rate?

With most pay-per-mile insurance plans, the insurance company installs a black box inside the insured’s vehicle.

This box transmits data to the insurance company on how many miles the vehicle is being driven and at what time of day or night the driving is occurring at.

With that information in hand, the insurance company uses a formula that they create that decides what fee per-mile they will charge to insure the specific driver.

From then on, the insurance company and the insured can both predict insurance quotes by multiplying the cost-per-mile number by the number of miles driven.

Why does the time of day and day of the week driven matter?

The black box records the time of day and days of the week usually traveled merely because fewer accidents occur during weekdays.

Therefore, an individual who drives only during Monday through Friday will have a lower cost-per-mile policy than someone who drives during the night and early morning hours on Saturdays and Sundays.

Of course, most people drive a mixture of days and times, so the cost is usually an averaged figure.

Who is a pay-per-mile insurance policy for?

It is for all drivers. However, it will likely benefit specific drivers over others.

For instance, those who work from home or who have a very short commute will save the most on this type of insurance plan.

However, there are more people than just those who do not often drive that can benefit.

Young Drivers

Young, unmarried male drivers pay, on average, the highest premiums nation wide; if they have any sports car, the sports car insurance rates are astronomical.

Having a sports car or other high-performance vehicle increases this likelihood. That means that the insurance company must charge more for the higher risk.

For unmarried men 25 years old and under who are careful and responsible drivers, a pay-per-mile rate would save them on their monthly premium because of their good driving record.

Middle-Aged Drivers

More experienced drivers often pay higher whole automotive insurance premiums than they should just because there is no other qualifying category to place them into.

However, they still pay more for their premiums than they require, meaning this group of drivers is where insurance companies most often make the most significant percentage of profit.

By using a more individualized pay-per-mile car insurance policy, drivers receive a much more accurate rate for their driving habits, slashing their premium payments often up to 50 percent

Older Drivers

While there are some in this age group who drive frequently, a large percentage of them are just not on the road behind the wheel as much as they might have been in the past.

Drivers who are older are very close to the youngest of drivers in terms of miles traveled, generally.

Therefore, their risk of getting in an accident or experiencing some other type of auto-related insurance loss is reduced only by the fact that they do not participate in the “dangerous” activity in the first place.

Pay as you go is the most customizable way to pay for car insurance. Enter your zip code below into our FREE tool below to compare now!


  1. https://www.statefarm.com/
  2. https://www.esurance.com/pay-per-mile
  3. https://www.nationwide.com/