Since the COVID-19 pandemic began in 2020, many people have moved to remote or hybrid work. For many drivers, that means far fewer miles on the odometer, but they’re still paying for insurance plans built for heavy commuting.
Pay-per-mile coverage takes a different approach. Instead of charging a flat rate based on estimated annual mileage, the insurer bills for the miles you actually drive. It’s not a brand-new idea, but interest has grown as daily commutes become less common.
This guide from CheapInsurance.com explores how these plans work, who’s most likely to save, and the trade-offs involved, from budget benefits to the privacy questions that come with tracking your driving.
Traditional car insurance sets premiums based partly on estimated annual mileage. Pay-per-mile splits the cost in two:
Mileage is confirmed through telematics devices, odometer photos, connected-car systems, or smartphone apps. Many plans include a daily mileage cap, so the occasional road trip doesn’t blow your monthly total. Coverage options — liability, collision, and comprehensive — are the same as with standard policies.
Only a few insurers offer true pay-per-mile coverage nationwide, and availability differs by state. Programs vary in how they track mileage, apply daily caps, and award discounts. Some limit billable miles each day; others average usage over time.
The biggest gains generally go to:
Studies point to both cost and environmental benefits. The Hamilton Project estimates that an 8% drop in driving could yield $50 billion to $60 billion in annual social benefits. Research from UC Berkeley found that competitive per-mile pricing could save individual drivers $58 to $75 a year.
Trial programs saw more than a 30% drop in claims. Groups such as the Clean Air Partnership say reduced driving could cut emissions by 5% to 15%.
Tracking mileage often requires drivers to share more than just odometer readings. Consumer Reports found some programs track and log location history, driving style, and even phone use while behind the wheel.
Advocacy groups, including the Electronic Privacy Information Center and the Consumer Federation of America, have called on insurers to be clearer about what they collect and how they use it.
A 2025 AAA Foundation study of more than 1,400 drivers over 24 weeks found:
Many drivers maintained these improvements even after the tracking stopped, suggesting the potential for lasting changes in behavior.
Potential downsides
Before making the switch, track your driving for a few months. Ask yourself:
Compare quotes, confirm that coverage levels meet your needs, and read each insurer’s privacy policy before signing up.
Pay-per-mile insurance may reduce costs for motorists who rarely drive. However, the data collection involved means it’s worth choosing a provider that’s upfront about how your information will be used.
Choosing the right plan can mean smaller bills, and possibly safer roads, as long as you understand the trade-offs before you commit.
This story was produced by CheapInsurance.com and reviewed and distributed by Stacker.
