Pay As You Go car Insurance
With No Deposit/No Down Payment.
What Is Pay As You Go Car Insurance?
Also known as usage-based car insurance or pay-per-mile insurance, pay as you go car insurance charges you based on the number of miles you drive. Your monthly bill includes a low base rate plus a variable rate that depends on how many miles you drive.
Pay as you go car insurance is a game-changer for low-mileage and budget-conscious drivers. Instead of paying a fixed monthly premium, you pay based on how much or how little you drive. With the rise of remote work, ride-sharing, and flexible commuting habits, more drivers across the USA are turning to this flexible, usage-based model.
How It Works:
- Base Rate: A fixed monthly fee that covers your vehicle while it’s parked (usually includes comprehensive and liability).
- Per-Mile Rate: A charge for each mile you drive. This is tracked through a device or mobile app provided by the insurer.
Who Should Consider Pay As You Go Car Insurance?
This model isn’t for everyone, but it’s a great option if you:
- Drive less than 10,000 miles per year
- Work remotely or part-time
- Own a second vehicle you rarely use
- Live in a city with good public transportation
- Are a student who drives occasionally
Example:
If your base rate is $30/month and you drive 400 miles at $0.06 per mile: Your Monthly Bill = $30 + ($0.06 × 400) = $54
Average Cost of Pay As You Go Insurance
| Mileage Per Month | Base Rate | Per Mile Rate | Estimated Monthly Cost |
|---|---|---|---|
| 300 miles | $25 | $0.06 | $43 |
| 600 miles | $30 | $0.06 | $66 |
| 1000 miles | $35 | $0.07 | $105 |
Source: Metromile, Mile Auto, and Root Insurance estimates (2025)
Top Providers Offering Pay As You Go Car Insurance
- Metromile – Specializes in pay-per-mile insurance with real-time tracking.
- Mile Auto – Uses odometer photos to track mileage (no tracking devices).
- Allstate Milewise – Offers base + per-mile pricing with a plug-in device.
- Nationwide SmartMiles – Mileage-based billing with monthly reports.
- Liberty Mutual ByMile – Tracks miles via a tag placed on your windshield.
Always check availability in your state via NAIC’s state insurance directory.
Benefits of Pay As You Go Car Insurance
1. Save Money
If you’re not driving much, why pay for full coverage? Pay as you go can reduce your monthly bill.
2. Environmentally Friendly
Drive less, save money—and reduce your carbon footprint.
3. Encourages Safe Driving
Many providers reward safe habits with lower rates.
4. Great for City Drivers
Ideal for people who walk, bike, or use public transit most of the time.
5. No Need for Long-Term Commitment
Some providers allow monthly cancellation without penalties.
What’s Covered?
Just like traditional auto insurance, pay as you go policies typically include:
- Liability Coverage – Bodily injury and property damage to others
- Collision Coverage – Damage to your own vehicle from accidents
- Comprehensive Coverage – Theft, fire, vandalism, and weather damage
- Uninsured/Underinsured Motorist – Protection from uninsured drivers
- Roadside Assistance – Optional add-on
How Is Mileage Tracked?
Insurers use various methods:
- Telematics Devices – Plug-in devices that monitor driving habits
- Mobile Apps – Track mileage using your smartphone’s GPS
- Odometer Photos – Send pictures monthly (used by Mile Auto)
These tools can also track driving behaviors like speed, braking, and cornering to assess risk.
Pros and Cons
Pros:
- Lower premiums for low-mileage drivers
- Personalized pricing
- Encourages safe driving
- Easy sign-up and cancellation
Cons:
- Not ideal for long-distance commuters
- GPS tracking may raise privacy concerns
- Driving more than average can increase costs
- Not available in all states
Who Should Avoid Pay As You Go Insurance?
While this model is great for some, it may not be right if you:
- Drive more than 12,000 miles/year
- Commute long distances daily
- Prefer fixed monthly billing
- Are uncomfortable with GPS tracking
Comparison: Traditional vs. Pay As You Go Insurance
| Feature | Traditional Insurance | Pay As You Go Insurance |
|---|---|---|
| Billing Type | Flat Monthly Rate | Base + Per Mile |
| Best For | Daily commuters | Low-mileage drivers |
| Flexibility | Moderate | High |
| Cost Transparency | Medium | High |
| Mileage Monitoring | Not Required | Required |
How to Sign Up for Pay As You Go Car Insurance
- Get a Quote Online: Use comparison tools to view options.
- Choose a Provider: Pick one that fits your driving habits.
- Install the Device/App: Follow instructions for setup.
- Drive and Save: Monitor your mileage and pay accordingly.
Real-Life Use Case
Case Study: Mike works from home and drives less than 300 miles a month. After switching to a pay-per-mile plan, his monthly insurance dropped from $120 to $45. He also received safe-driving bonuses after three months.
Safety and Data Privacy
Telematics-based policies require data sharing. Reputable insurers encrypt your driving data and ensure it’s used solely for pricing and policy management. Still, always read privacy policies before enrolling.
How It Impacts Your Driving Behavior
Many users report becoming more aware of their driving habits and making safer choices. With real-time tracking and personalized feedback, you can adjust your driving for better safety—and lower bills.
Here Is A List Of Important FAQS
Yes—for low-mileage drivers, it’s typically much cheaper than traditional policies.
Depending on the provider, they’ll use a plug-in device, mobile app, or photo-based verification.
Absolutely. Most policies offer monthly cancellation, letting you switch anytime.
No, getting a quote or enrolling does not affect your credit.
It’s becoming more widely available but may not be in every state. Check your ZIP code with the insurer.
You’ll simply pay for the extra miles. Some providers alert you if you’re close to exceeding your average.
For more details, visit the Insurance Information Institute or your state insurance department.
Sources & References:
Insurance Information Institute (III) – Detailed explanation of usage-based (pay-as-you-go) car insurance and how it works.
National Association of Insurance Commissioners (NAIC) – Find state-specific insurance laws and check insurer licensing.
Consumer Financial Protection Bureau (CFPB) – Trusted resource for understanding financial implications of car insurance products.
Metromile Official Site – A leading pay-per-mile insurance provider in the U.S.
Mile Auto – A telematics-free pay-as-you-go car insurance provider.
Allstate Milewise – Pay-per-mile program from Allstate Insurance.
Forbes – Usage-Based Car Insurance – An overview of UBI insurance options and comparison of providers.
About the Author
Alex Huber is a content writer for Atoz Insurances and he is a very experienced and well-rounded freelance content writer who specializes in the insurance and finance niches. His writing is engaging and informative, and he has a strong understanding of the industries he writes about.