Changing your car insurance when you use your car less often can be a real money saver.
- Switching to pay-per-mile car insurance can save you more than $1,000 a year in car insurance.
- Pay-per-mile car insurance offers the same coverage as a traditional policy, but your premiums are based on the number of miles you drive.
- Pay-per-mile car insurance is best for low-mileage drivers.
The number of people working from home has increased dramatically since the pandemic. Although many workers are returning to the office, 92% of workers expect to work from home at least one day a week, and 80% expect to work from home at least three days a week. The national average for auto insurance premiums is $2,875 per year. By converting your auto insurance to a pay-per-mile policy, you can potentially save $1,000 or more per year.
What is pay-per-mile car insurance?
Pay-per-mile car insurance is for low-mileage drivers. It offers the same coverage as a traditional policy, but your monthly premium is based on the number of miles you drive. Drivers have more control over their car insurance costs compared to a traditional policy.
Insurance companies track the number of miles driven through telematics or by taking a photo of your odometer and sending it to the insurer. Telematics is a technology that monitors vehicles in real time via GPS. It can be built into a car like a Tesla or you can plug a device into your car’s diagnostic panel.
How Much Does Pay Per Mile Car Insurance Cost?
Pay-per-mile car insurance premiums vary by insurance company and driver. Your rate usually consists of two parts: a base fixed monthly rate and a variable rate (cost per mile). The base rate is based on factors such as the driver’s gender, age, location and driving history. The variable part of the fare is based on actual kilometers driven. Your monthly premium will vary from month to month.
For example, a 35-year-old single man with a good driving record might pay $60 base rate per month and $0.07 per mile driven that month. If he drives 500 miles in a month, his monthly premium will be $95 ($60 base + $35 variable). That’s a 60% savings on the average premium of $240 per month. Assuming the driver continues to drive 500 miles per month, over a year that equates to over $1,700 in savings.
Should you get a pay-per-mile insurance policy?
This type of car insurance is best for low-mileage drivers – those who work from or near home, use public transport, retirees who don’t drive often, students who don’t commute, and drivers with multiple vehicles . If you drive a high number of miles and make long trips, then a traditional policy may be best for you. After you get your quote from the insurance company, compare the rates of both a traditional policy and a pay-per-mile policy to see which one costs less.
Pay per mile has become more popular as insurance companies can now offer more targeted and cheaper policies to meet drivers’ demands. Even with many workers returning to the office, many drivers are driving less than before. If you don’t drive much, you may be paying more for car insurance. Switching to a car insurance policy that is based on how many miles you drive could potentially save you $1,000 or more per year.
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