Owning a car is convenient, whether you use it for occasional outings or commuting to work. It eliminates the need for rental cars, public transport, or walking.
However, the joy of car ownership comes with unexpected costs like fuel, depreciation, and maintenance. Additionally, if you only drive occasionally, car insurance becomes a significant extra expense.
Fortunately, new insurance options have been specifically designed for drivers like you. These allow you to pay only for the miles you actually drive, rather than the miles an insurance company estimates you will.
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What Is Pay-As-You-Go Insurance?
Pay-as-you-go insurance is a modern policy where premiums are based on how frequently and how far you drive. Instead of charging based on estimated usage, insurers charge you based on your actual driving habits. This means infrequent drivers can enjoy lower premiums, making it an ideal option for those who don’t drive much but still want coverage.
Insurance companies will tailor your policy according to your driving behavior rather than relying solely on statistical risk assessments.
Who Can Benefit from It?
This usage-based policy is ideal for:
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- Urban residents who drive occasionally for errands or shopping.
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- Retirees or seniors who don’t drive often.
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- Families with multiple cars.
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- People working from home or using public transit.
Best Insurance Companies Offering Pay-As-You-Go Insurance
Allstate
Allstate offers the Milewise program, which charges per mile for those driving between 1,000 and 10,000 miles annually. This is ideal for those driving significantly less than the average 13,400 miles per year. To qualify, you need a modern car, typically one made in 1996 or later, that can support a telematics device.
Progressive
Progressive’s Snapshot program adjusts your rate based on your driving behavior—how often, how, and when you drive. By signing up, you get an immediate discount, with average savings of $146 annually. You can use either the Snapshot app or a plug-in device to monitor your driving habits and there’s a 30-day trial to decide if it’s right for you.
State Farm
State Farm’s Drive Safe & Save program can save you up to 30% on premiums if you maintain safe driving habits. By using their app and a Bluetooth Beacon, your driving is tracked, including acceleration, braking, speeding, and distance. Multiple vehicles in your household can be enrolled for additional savings.
Safeco
Safeco’s RightTrack program offers potential savings of up to $513 annually for safe driving. After signing up, you use the Safeco RightTrack app to monitor your driving behavior over 90 days. Savings are calculated based on total miles, night driving, braking, and acceleration, and applied to your premium.
Esurance
Esurance offers the DriveSense app, which logs driving habits and provides exclusive discounts for Esurance customers. After logging a minimum of 50 trips per term, Esurance reviews your habits and applies a customized discount to your premium. You can request a quote online or through the app to get started.
By exploring these options, you can find the best pay-as-you-go insurance that fits your driving habits and save money on your premiums.
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