Pay Per Mile Car Insurance Drive Less Pay Less

Many drivers are overpaying for car insurance not because of their driving record but because of how little they drive. If you're logging under 10,000 miles a year your insurer is probably charging you for miles you don't even use and that means you could be saving hundreds of dollars on car insurance. In this video I'll be breaking down how pay-per-mile car insurance actually works, who actually qualifies and whether it can really cut your bill in half. Plus I'll show you which company offers the best deal and the hidden catch that most drivers miss. Think of pay-per-mile insurance like a cell phone plan for your car. You pay a small fixed base rate every month plus a couple of cents for every mile you drive. The less you drive the less you pay. You still have the same liability insurance that's on traditional car insurance. The difference is how your premium is actually calculated. So let's say your base rate is $60 and your pay-per-mile rate is 10 cents. If you drive 1,200 miles that's $180 for car insurance. But drive only 400 miles the next month and your premium drops to $100. That makes your car insurance rates adjust with your lifestyle not just numbers on a spreadsheet representing your risk. So now you might be wondering how does your insurer actually know how many miles you drive? Insurers track mileage in three ways. Plug-in devices that connect to your car's onboard computer, mobile apps that track your mileage via GPS, and manual upload of your odometer photos at the end of each month. Most programs put you at month's end and if you take a long trip for example many insurers cap you at the 250 miles per day mark so you won't have any unexpected huge charges. Okay cool tech but does it actually end up saving you money? Let's pull back the curtain and see which insurers are actually giving low mileage drivers the best rates right now. So what will pay-per-mile insurance actually cost you? It usually runs between $65 and $150 a month but that will depend on your base rate, your charge per mile, and how much you actually drive of course. Here's a quick rundown of the top programs right now. Nationwide Smart Miles best overall and available in 40 states. It caps your charges at 250 miles per day and also has safe driving discounts. Allstate Milewise available in 16 states with a daily rate plus a per mile fee. And Metromile the pioneer in this space available in fewer states but great for drivers in cities. But before you sign up know that there's one thing that will determine whether this will actually save you money and most drivers skip it. Pay-per-mile insurance works best for drivers logging less than 10,000 miles per year. That's about 200 miles a week. So remote workers, retirees, or families with an extra car often see the biggest savings. And unfortunately some people won't qualify if they don't have a tech necessary. You usually need a car of model year 1996 or later. You'll need a compatible plug-in device to track your driving. And often you'll need a clean driving record. Also worth noting not every state allows pay-per-mile car insurance. States like New York, North Carolina, Louisiana, and Oklahoma don't have these programs. So yes it can save you money but if you fall into this next group it might actually cost you more money. If you drive for work, share your car with your family, or take frequent road trips you might blow past the mileage numbers that will get you savings. Plus most policies cover personal driving only, not driving for business or delivery. So if you're clocking miles on long commutes or driving for Uber, probably a traditional policy with rideshare insurance is what's going to be cheapest for you. Okay so let's say you're in that less than 10,000 miles a year bucket and you think pay-per-mile car insurance is for you. While it's pretty easy to sign up online usually only takes about 15 to 30 minutes. Here should be your typical process. Check your annual mileage. Make sure that you fall into this bucket of under 10,000 miles per year. Then try to get a quote online with someone like Nationwide Smart Miles or Metro Mile. Metro Mile is kind of the pioneer in this space, has an easy online quoting tool. Then set up your tracking method whether that's an app, odometer photo, or plug-in device. And track your mileage and costs over that first month and see if it's really saving you money. Some devices will even let you set alerts at about 80% to 90% of your set driving limit so you're not surprised by the bill. If you drive less than 10,000 miles per year, pay-per-mile insurance could easily save you hundreds on your car insurance. It doesn't sacrifice coverage. It's flexible and transparent and built for people who don't live behind a wheel. Compare your options side by side and find your best fit at moneygeek.com.