Mathew B. Sims is Editor-in-Chief and has authored, edited, and contributed to several books. He has been working in the insurance industry ensuring content is accurate for consumers who are searching for the best policies and rates. He has also been featured on sites like UpJourney.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Dec 8, 2020

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Things to Remember...

  • State Farm and Allstate have stated that they are considering pay-per-mile auto insurance
  • Pay-as-you-go insurance could save you a lot of money
  • Compare at least three different companies before you make a final decision on auto insurance coverage

When Insurance Commissioner Steve Poizner of California allowed pay-as-you-go insurance, it opened the gates for auto insurance companies to start pay-as-you-go programs.

Poizner released regulations permitting and authorizing mileage verification for pay-as-you-drive auto insurance. Pay-as-you go is a type of usage-based car insurance that determines rates based on driving habits.

The pay-as-you-go insurance idea encourages motorists to drive less. Most of the top insurance companies adopted this idea and provide pay-as-you-go insurance in select states.

Not only does it promote driving less, but it can also save you hundreds of dollars per month on auto insurance. Continue reading to learn more about cheap auto insurance under pay-as-you-go options.

Find affordable pay-as-you-go auto insurance in your area when you enter your ZIP code in our free tool. 

What is pay-as-you-go auto insurance?

Pay-as-you-go insurance, or pay-per-mile insurance, is a usage-based insurance program in which an auto insurance company issues rates based on your driving habits and the number of miles you drive.

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How much does does pay-as-you-go auto insurance cost?

Pay-as-you-go auto insurance varies from state-to-state and company-to-company. For example, Allstate Milewise® calculates your pay-as-you-go car insurance by adding your daily rate (flat-rate) and pay-per-mile rate (cent per mile x the number of miles).

Pay-as-you-go auto insurance is about $20 per month.

The total cost is what you pay for that day. Pay-as-you-go auto insurance rates will be resolved at the end of the month or the beginning of next month.

How does pay-as-you-go auto insurance work?

Pay-as-you-go auto insurance works differently for each company. Some car insurance companies will provide telematics that you’ll install in your vehicle so they can track your driving habits. Other programs need you to connect your smartphone to their servers.

Each auto insurance company uses pay-as-you-go insurance differently. Some only keep track of your driving habits, while other companies track the number of miles you drive. Continue reading to learn how pay-as-you-go car insurance works.

Does pay-as-you-go insurance require mobile apps? 

Some auto insurance companies will ask you to use mobile apps on your smartphone to connect your car.

In recent years, vehicles have been equipped with Bluetooth technology that connects to your smart devices.

Therefore, car insurance providers have invested in mobile apps that connect your vehicle so they can monitor the number of miles you drive and investigate your driving behavior.

The companies that monitor your driving habits are usually evaluating whether you’re a good driver and if they should give you a discount after a monitoring period.

Does pay-as-you-go insurance require telematics? 

According to the Insurance Information Institute, telematics is a popular program that encourages drivers to use their vehicles less. However, some vehicles don’t come with Bluetooth technology, so they’ll need to use telematics devices.

A standard telematics device is a Bluetooth beacon that you can put somewhere in your car. The most common place to install a telematics device is the On-Board Diagnostics (OBD) port.

These devices can also connect to mobile apps on your smartphone. If there isn’t a mobile app, the information will be sent to your car insurance company for review.

Which auto insurance companies offer pay-as-you-go auto insurance?

Spokesmen from a few auto insurance companies, including State Farm and Allstate, have stated that they are considering pay-per-mile auto insurance.

Leisure driving may be reduced, and families will be more responsible for grouping trips together and making fewer unnecessary trips.

Carpooling would likely increase.

It also might encourage owning multiple vehicles, because families wouldn’t be paying for cars that just sit there.

Some of the major national auto insurance providers provide a pay-as-you-go insurance discount. The company programs currently available are:

  • Progressive with Snapshot
  • Esurance with DriveSense
  • Nationwide with SmartRide
  • Allstate with Drivewise
  • Safeco with RightTrack
  • Travelers with IntelliDrive
  • State Farm with Drive Safe & Save

If you don’t see your company, or a company you’d like to sign up with, ask you local agency about what options they may offer.

From a consumer perspective, the change makes a lot of sense.

Regardless of whether pay-as-you-go is ever available to you or not, checking to make sure you’re getting the best rates you can right now is a great idea.

Which auto insurance companies offer pay-as-you-go discounts?

Who has the best pay-per-mile auto insurance? That depends.

Your pay-as-you-go car insurance may not involve how much you spend per month but rather how much you save per year.

Some pay-as-you-go insurance programs are designed to save you money based on how you drive instead of issuing a monthly rate based on how much you drive.

Here are a few usage-based auto insurance programs that provide discounts using the pay-as-you-go insurance method.

Popular Usage-Based Auto Insurance Programs by Company
Company Usage-Based Auto Insurance ProgramsEstimated Savings
Progressive SnapShotAverage of $130
Allstate DrivewiseAverage of 10% to 25%
State Farm Drive Safe & SaveUp to 15%
Esurance DriveSenseVaries
Nationwide SmartRideUp to 40%
Liberty Mutual RightTrackAverage of 5% to 30%
Root Car InsuranceVaries
MetromileVaries
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These are standard savings, but your savings could vary by state. Always take advantage of options that allow you to save on auto insurance per year.

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What’s the difference between pay-as-you-drive insurance and pay-how-you-drive auto insurance?

Pay-as-you-drive (PAYD) and pay-how-you-drive (PHYD) insurance are two different types of insurance programs.

PAYD auto insurance is the same as pay-per-mile and pay-as-you-go car insurance. These types of pay-as-you-go auto insurance rates are based on the number of miles you drive each day or each month (with some attention paid to how you drive).

Pay-how-you-drive car insurance monitors your driving habits and issues rates based on your driving behavior. PHYD insurance focuses on discounts.

Does pay-as-you-go auto insurance offer bonus coverage?

Pay-as-you-go car insurance covers the minimum requirements (liabiity coverage). Liability coverage limits vary by state, so what you’re required to carry will depend on where you live. 

Does pay-as-you-go insurance include collision and comprehensive coverage?

This could be tricky. The purpose of pay-as-you-go insurance is to drive your vehicle safely while spending less time and miles behind the wheel. It’s uncommon for auto insurance companies to provide full coverage perks on pay-as-you-go auto insurance.

Don’t bet on receiving collision and comprehensive coverages, but it won’t hurt to ask your car insurance about other options you can add to your pay-as-you-go insurance.

Who needs pay-as-you-go auto insurance?

Pay-as-you-go car insurance is limited to a few states. Each company has a list of states where its pay-as-you-go program is available. You may live in a state where pay-as-you-go auto insurance isn’t available. In that case, you’ll have to rely on car insurance discounts to lower your rates instead.

Is pay-as-you-go monthly auto insurance available near me? It’s possible. Try finding an affordable pay-as-you-go auto insurance company in your local area. Enter your ZIP code in the free online tool to find out now.

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Enter your ZIP code below to view companies that have cheap auto insurance rates.

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Is pay-as-you-go auto insurance worth it?

Any program that will ultimately save you money is worth it. Auto insurance rates can be expensive. Sometimes factors that affect your auto insurance rates don’t work in your favor. Therefore, you should look into any solution that lowers your rate.

Before you buy pay-as-you-go auto insurance, shop around to find the best deals and discounts.

Frequently Asked Questions: Pay-As-You-Go Insurance

Do you still have questions about pay-as-you-go auto insurance? Wondering what pay-to-go or pay-and-go car insurance is? Read these frequently asked questions for more. 

#1 – What is pay-per-mile insurance? 

How does pay-per-mile insurance work? Pay-per-mile insurance is insurance that is specifically based on the number of miles you drive. The fewer miles you drive, the lower your rates will be. Anyone can apply for pay-per-mile coverage, but it’s not is usually not recomended unless you drive less than 10,000 miles per year.

What’s the difference between pay-per-mile and pay-as-you-drive or pay-as-you-go coverage? Pay-as-you-drive or pay-as-you-go insurance is usage-based, which means factors like how you drive, not just the number of miles you drive, affect your rates. 

Similar to pay-as-you-go insurance, you can save up to 40 percent on your rates with pay-per-mile coverage. However, it’s not currently available in all 50 states. 

If you choose pay-per-mile coverage, you won’t need to purchase any telematic technology. It will either be provided to you by the insurance company or you’ll need to download an app on your smartphone. 

#2 – What is drive-and-go insurance?

Drive-and-go insurance isn’t currently a particular type of auto insurance available for purchase. 

#3 – What is pay-and-go insurance? 

Pay-and-go insurance isn’t currently a particular type of auto insurance available for purchase. 

Start looking for cheap pay-as-you-go auto insurance quotes by entering your ZIP code in the tool on this page. It’s free, and it shows you the most affordable auto insurance companies in your area.