What Is Pay-Per-Mile Insurance?

May 04, 2020
A dark-haired young man driving a car and looking in the rearview mirror.

If you have a car but don’t use it frequently, you might benefit from a pay-per-mile car insurance program to save on your insurance premiums. That’s because insurance companies base their rates on risk, and the less you drive, the lower your risk generally is of getting in an accident.

Some of the reasons you might be a low-mileage driver could include, but are not limited to, any of the following:[1]

  • You’re a retired senior citizen and don’t need to drive as much as you used to
  • You take the bus, ride a bicycle, walk to work, or work from home
  • You carpool with others, thus reducing the number of miles you drive
  • You have a second vehicle that you use for running errands so you put fewer miles on your primary car

Any of these reasons might be lowering the miles you’re logging. It could be worthwhile to take a closer look at the number of miles you are (or aren’t) putting on your vehicle, particularly if you’re looking to save money on your car insurance payments.

The number that constitutes low mileage can vary from one insurance company to the next, but as a general rule, it refers to cars that are only being driven up to between 7,500 and 15,000 miles a year.[1] Again, it’s important to keep in mind that this upper limit can vary depending on your insurance company.

To qualify for any discounts, you may have to have your odometer reading verified by a third party and then submit paperwork along with a photo of the current mileage. Then, if you stay below a certain cap for the year, you could qualify for a discount.

Nationwide offers pay-per-mile car insurance

Do you use your car less than the average driver? You might work from home or primarily use public transit to get around. If so, you could save by signing up for Nationwide’s SmartMiles. With this pay-by-mile insurance program, your insurance rates are based primarily on how many miles you drive, so your premiums are flexible and reflect the distances you actually travel — not what vehicle you might drive or an unlimited number of miles at a higher rate.

Driving fewer miles has several benefits: it’s less wear and tear on your vehicle and it also reduces your risk of having a collision. And now, fewer miles could even save you money on your auto insurance.

[1]“Low Mileage and Usage Based Discounts,” DMV.org, https://www.dmv.org/insurance/low-mileage-and-usage-based-discounts.php, downloaded Jan. 29, 2019.

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