Pay-per-mile insurance programs are a cost-effective alternative that allows policyholders who drive less frequently to enjoy potentially lower rates. Remote workers and other groups of people that drive infrequently, such as retirees, can benefit greatly from this insurance offering.
The program may also make more economic sense to you than traditional car insurance if you have a second car that you seldom use. Similarly, you can opt for pay-per-mile auto insurance if you have a short commute — driving only a few miles to and from work every day — and don't drive elsewhere much.
Not all car insurance companies offer this type of insurance program. Some insurers call this program pay-as-you-go, others usage-based insurance. For the car insurance carriers that offer it, the pricing model is such that you pay a base rate plus by-the-mile charges.
How Pay-per-Mile Compares to Traditional Car Insurance
The pay-per-mile program is, in most ways, similar to traditional auto insurance in that it includes the same standard options for coverage and add-ons. You can, of course, collaborate with your agent to customize the policy so it best meets your needs.
Unlike traditional car insurance, your monthly car insurance costs under the pay-per-mile program will vary month by month, as your monthly premium is calculated based on usage. You will pay a base price plus the product of the miles you drive in a particular month and the per-mile price.
Other Considerations
The car insurance provider will need an accurate reading of your mileage every month. You will need to plug a telematics device into your car to keep track of your mileage. Your insurer may also track your mileage through an app on your phone. Other insurers may also request that you occasionally send in pictures of your odometer.
Beyond mileage, telematic devices will also help to track other things, such as your driving habits, which the insurer will certainly factor in when calculating your premium. Maintaining a record of safe driving can help qualify you for the best discounts on your car insurance.
In addition to your driving record, the car insurance carrier may also look at other factors, such as age. This covers both your age and the age of your vehicle. As with traditional car insurance, the age of your car will determine the necessary types of coverage and the premiums.
In Closing
Is pay-per-mile the right option for you? Talk to a car insurance agent for a full assessment of your driver profile and more insights on whether or not the program is a good idea for you. For more information on auto insurance, contact a professional near you.
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