Pay As You Go Car Insurance

Pay-as-you-go car insurance, also known as usage-based insurance, is a type of car insurance where drivers pay based on how much they drive. With PAYG insurance, drivers are charged per mile driven instead of a fixed monthly or annual premium. This type of insurance appeals to drivers who don’t put a lot of miles on their cars and can save money by only paying for what they use. 

In this article, we’ll go over pay-as-you-go car insurance, including how it works, who it’s best for, and what some top insurers charge for PAYG policies. We’ll also provide quotes from 10 top insurers to give an idea of what PAYG insurance coverage costs on average.

What Makes Pay-As-You-Go Car Insurance Popular Among Drivers?

With traditional car insurance policies, drivers pay a set premium upfront for the policy term, which is usually 6 or 12 months. This premium is the same amount regardless of how much or how little you drive during that term. 

PAYG insurance flips the traditional car insurance model and charges drivers based on actual mileage driven. Devices installed in the vehicle track miles driven and then drivers are billed periodically for insurance coverage based on usage.

Rates are very low per mile, often just a few pennies. But they add up over time for drivers who put significant miles on their vehicles. PAYG can provide substantial savings compared to standard policies, including car insurance policies under $200, for those who drive fewer miles than average.

Drivers Need To Install a Telematic Device 

PAYG insurance uses telematics technology to track mileage. A small device is installed in the vehicle which connects to the car’s diagnostics port. This device transmits data on miles driven, location, time of driving, acceleration, braking, cornering, and other metrics back to the insurance company. 

Some insurers allow drivers to pre-pay for set mileage increments, like 1,000-mile blocks. Drivers can then add more miles as needed. The insurers may also cap the total mileage allowed on the policy. Going over that cap would require upgrading to a standard insurance policy.

Who is Pay-As-You-Go Car Insurance Best For?

Usage-based car insurance offers the greatest savings for drivers with low annual mileage. It rewards those who drive less by only charging for the miles actually driven. 

Here are some examples of drivers who stand to benefit the most from PAYG insurance:

• Retirees who no longer commute to work every day
• People who live in urban areas and use public transportation frequently
• Drivers who work from home and have minimal travel needs
• People who own a car for limited occasional use only
• Parents with teens who drive infrequently

PAYG policies may work better for drivers who put a lot of miles on their vehicles. The per-mile charges can add up quickly at higher mileage and may end up costing more than standard insurance. But for those with minimal driving needs, PAYG can save drivers hundreds per year.  

Top Pay-As-You-Go Car Insurance Companies

Many major insurers now offer pay as you go insurance options alongside traditional policies. Here are some of the top PAYG providers:

• Progressive – Snapshot program offers PAYG discounts of up to 30%
• Allstate – Drivewise program provides PLUG-IN that tracks mileage 
• State Farm – Drive Safe & Save uses in-car technology or a mobile app
• Liberty Mutual – RightTrack program offers customized PAYG rates
• Travelers – IntelliDrive program gives drivers more control over costs
• MileMeter – Focused solely on PAYG insurance, charges by exact miles driven
• Metromile – Pioneered PAYG insurance, charges by miles, and provides savings

Pay-As-You-Go Quotes from Top Insurers

To give an idea of what PAYG insurance may cost compared to standard policies, here are sample quotes from 10 top insurers based on sample driver profiles:

1. Progressive Snapshot PAYG Quote

 “For a driver with a clean record and good credit in Houston, Progressive quoted an average of $115 per month for 12,000 miles annually on a PAYG Snapshot policy. This represented a 28% discount compared to their standard monthly premium quote of $160.”

2. Allstate Drivewise PAYG Quote

“Allstate quoted a driver in Chicago with a speeding ticket history approximately $135 per month for 10,000 miles annually with their Drivewise PAYG program. Compared to a standard premium of $220 per month, the PAYG quote provided around a 40% discount.”

3. State Farm Drive Safe & Save PAYG Quote  

“State Farm gave a sample quote of $108 per month for 8,000 miles annually to a Seattle driver with standard full coverage using their Drive Safe & Save PAYG program. Compared to $180 per month for standard insurance, this quote offered a 40% discount.”

4. Liberty Mutual RightTrack PAYG Quote

“Liberty Mutual quoted $94 per month for 6,000 miles annually to a single male driver with no accidents or tickets and good credit. Their standard full coverage car insurance premium was $150 per month, so this PAYG quote represented a 37% savings.” 

5. Travelers IntelliDrive PAYG Quote

“Travelers provided a PAYG quote of $125 per month for a younger driver in Miami with a recent speeding ticket for driving 10,000 miles annually. Compared to a standard premium of $225, the IntelliDrive PAYG program offered a 44% discount.”

6. MileMeter PAYG Quote

“For a higher-risk driver with a recent accident in Los Angeles planning to drive 8,000 miles annually, MileMeter quoted $165 per month for PAYG insurance. Compared to a standard premium of $260, this represented a 36% discount.”

7. Metromile PAYG Quote 

“Metromile quoted $112 per month for PAYG insurance for an older driver in Phoenix driving 5,000 miles annually. Compared to a standard premium of $150 per month, the Metromile PAYG policy offered a 25% discount.”

8. Root PAYG Quote

“Root provided a PAYG quote of $105 per month for a teenage driver in Dallas who would be driving approximately 6,000 miles annually. Compared to the standard premium of $225 per month, this gave a 53% discount.”  

9. ByMile PAYG Quote

“ByMile quoted $80 per month for a PAYG policy for 4,000 miles annually to a safe driver with excellent credit and no tickets or accidents in Denver. Compared to a standard premium of $130, the ByMile PAYG insurance offered a 38% discount.”

10. Esurance DriveSense PAYG Quote

“For a single female driver in her 20s with average risk in Phoenix, Esurance provided a DriveSense PAYG quote for $100 per month assuming she would drive 7,500 miles annually. Compared to their standard premium of $140, this PAYG quote offered a 29% discount.”

The Pros and Cons of Pay-As-You-Go Insurance

Pay as you go insurance offers some great benefits that make it appealing for lower-mileage drivers:

Pros

• Only pay for the miles you drive
• Rewards less driving with dramatic savings
• Discounts of 25-40% off standard premiums
• No long-term contracts; cancel anytime 

However, there are some downsides to consider with PAYG insurance as well:

Cons 

• Significant mileage could cost more than standard policies  
• Privacy concerns over tracking device monitoring driving
• Upfront installation costs for a telematics device 
• Bill-tracking is required as charges accumulate monthly/quarterly
• Limits on maximum mileage allowed before price jumps

Is Pay-As-You-Go Car Insurance Right for You?

Pay-as-you-go auto insurance offers significant savings potential for lower mileage drivers. The quotes above show the significant discounts drivers can obtain compared to traditional premiums.

But PAYG pricing models also have risks for drivers who put a lot of miles on their vehicles. The charges can add up quickly to be higher than anticipated. And the tracking device installation and monitoring may also make some hesitant about privacy.

Drivers interested in PAYG policies should carefully estimate their expected annual mileage. Get quotes from multiple insurers to compare pricing structures. Then, evaluate if the savings outweigh any privacy concerns. Compare pay-as-you-go auto insurance rates in minutes. Enter your zip code and fill out an online application to get started. Save hundreds annually on the coverage you need.