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Is pay-per-mile auto insurance worth it? When you save, when to stick with traditional car insurance

Driving a Car
Posted at 5:00 AM, May 17, 2021
and last updated 2021-05-17 10:19:49-04

The pandemic has kept a lot of Arizonans working from home.

That means less driving and possibly some car insurance savings, and some insurers are now offering pay-per-mile policies.

It's just as it sounds, there's a set charge for each mile you drive.

"Your driving is going to be tracked. So, it's either going to be through a plug-in device into your car or a mobile app on your phone," says Ben Moore, an insurance expert with Nerdwallet.

Moore says in addition to the per-mile charge, there is also a monthly fee.

Both charges are based on the same factors as traditional policies-age, gender, credit, type/age of car, and more.

"It could be higher than someone with a better driving record, maybe they don't have any violations on their record. They may have a lower base rate," Moore says.

Right now, the average driver logs 13,500 miles yearly. That's 259 miles a month and 37 miles a day.

If you drive much less, maybe you're a stay-at-home parent, a senior, or split miles between cars, you might be able to save paying per mile.

Moore says the insurance only makes sense if you can count on very low mileage.

"Even if you have a low base rate and you're logging high mileage, it probably still won't make sense," he says.

Nationwide Smart Miles, Allstate and Metromile are three of the insurers offering per-mile insurance in Arizona.

It is a different type of insurance than pay-as-you-drive policies, which are also increasingly popular.

A pay-as-you-drive rate is based less on distance and more on monitoring how you drive through a monitoring system plugged into your car.

Heavy acceleration, braking, using your cell phone, and other driving behaviors can all be tracked and used to calculate your rate with pay as you drive.

But since your insurer tracks you for per-mile insurance as well to calculate mileage, ask if your driving behavior is also tracked and used.

If you're thinking of switching policies, track how many miles you drive per week, so you know how it compares to the average 259 miles.

Nerdwallet has more information about per-mile insurance and which carriers offer it.