Should You Sign Up for Pay-Per-Mile Auto Insurance in 2024?

When you own a car, auto insurance is an inevitable expense that comes with it. Ascent research finds that U.S. drivers pay $3,017 per year, on average, to maintain auto insurance. But the premium you pay will hinge on a variety of factors, including:

• Your driving history
• The make, model, and condition of your car at the time you buy it
• Your location

Another factor that might influence your car insurance costs is the extent to which you use your car. And if you don't drive very often, there's a specific type of car insurance it could pay to look into: pay-per-mile insurance.

How pay-per-mile insurance works

As the name implies, with pay-per-mile insurance, you're charged based on the number of miles you drive. To be clear, pay-per-mile insurance usually requires you to pay a base premium rate so that even if you drive no miles in the course of a year, you're still paying something. However, if your vehicle doesn't get a lot of usage, then it could make sense to pay by the mile if it saves you a lot of money.

And if you're wondering how your auto insurance company will track your mileage, the answer is technology, baby. Many cars have built-in technology that can track mileage already. Otherwise, your insurer may require you to plug a device into your car that tracks mileage.

Either way, your insurer won't just take your word for it when it comes to the number of miles you've driven. It's going to need proof either way. But these days, that's not so hard to come by.

Is pay-per-mile insurance right for you?

Nowadays, a lot of people are working from home on a permanent basis. If that's the case, and you don't anticipate having to commute to a job anytime soon, then it could pay to look at pay-per mile insurance.

Similarly, maybe you're a stay-at-home parent who drives only a few miles each week to run errands or take your kids to activities. In that scenario, it could pay to price out a pay-per mile insurance policy and see if it's less expensive than a standard one.

Or maybe you're a retiree in a fairly walkable neighborhood. You may only use your car once a week when you're buying too much at the grocery store to carry home in your arms. That, too, could be a scenario in which pay-per-mile insurance makes financial sense.

To be clear, the amount you're quoted per mile will hinge on a number of factors, your location being one of them. Even if you drive very infrequently, it's impossible to say with certainty that pay-per mile insurance will save you money. To know that, you'll need to compare your premium for standard coverage with what you're quoted on a per-mile basis, and then try to estimate the number of miles you'll drive in the course of a year.

But either way, if you don't drive often, pay-per mile auto insurance is an option worth researching. It could result in a fair amount of savings this year.