Insights on Pay-by-the-Mile/Pay-Per-Mile Insurance

• In pay-by-the-mile insurance, more than half the rate can be based on mileage, typically making it lower than a standard policy rate for drivers who drive their cars less than the U.S. average of 13.500 miles per year. However, the base rate of the policy is still determined by the factors that determine standard insurance policies such as driver demographics, driving record, type of vehicle, location, and so on.
• Pay-per-mile insurance requires the driver to keep a device in the car "that plugs into a port near the steering wheel (called the OBD-II)", and tracks the mileage. Therefore, the car may need to be of model year 1996 or newer for the device to work, depending on the insurer, while some devices might be incompatible with hybrid vehicles."
• The leading companies that offer auto insurance by the mile are Metromile, Milewise from Allstate, SmartMiles from Nationwide, and Mile Auto Insurance.

Factors to Consider in Choosing Pay-Per-Mile Insurance

• Amount of distance driven as an underestimation could mean paying more in the long run.
• Monthly payments may vary, making it difficult to budget for auto insurance payments each month.
• Although the insurer is primarily tracking the amount of miles driven, many of these companies also track driving behaviors.
• There are privacy concerns given that the pay-per-mile devices can also track driving behavior, location, and the time of day the car is driven.
• This type of insurance may not be allowed by some loan and lease companies.
• Pay-per-mile car insurance is not yet available nationwide.

Pay-Per-Mile Car Insurance Providers in Nevada and/or California

• Two of the pay-per-mile insurance providers that are available in Nevada and/or California are: Metromile, available in California; and SmartMiles (Nationwide), available in Nevada. The offering from each provider is presented below:
•  Metromile 
• Available in California 
• Base rate: $29 
• Per mile rate: $0.06 
• All miles over 250 per day are free
• Insurance is offered to individuals who are in permanent possession of a vehicle either through ownership (paid for or financed) or a leasing agreement.
• The soonest effective date for a policy to go into effect is the following day, as soon as payment is processed.
•  No fees for policy termination.
•  SmartMiles 
• Available in Nevada 
• Base rate: $48 
• Per mile rate: $0.06 
•  10% discount for safe driving after the first renewal.
• SmartMiles Road Trip Exception, where only the first 250 miles count on a single day.
•  Most vehicles manufactured after 1996 are eligible; but some hybrid and diesel-powered cars may be incompatible with the SmartMiles device.

Summary of Findings

• During our preliminary hour of research, we provided insights on what pay-per-mile insurance is, and highlighted some factors to consider when making the decision to take it up. From our research, we found that pay-per-mile insurance is not yet available nationwide, and therefore only provided the two choices available in Nevada (Las Vegas) and California, as these were provided as the geographical locations that the car will be driven. We did not find clear information on changes in the policy or rates in a case where the driver is not the owner of the car as this information was not publicly available.
• We also found that there are other pay-as-you-go insurance options that are available and could of interest in order to find the cheapest auto insurance option such as pay-per-hour and pay-how-you-drive car insurance.