What to Know About Mileage-Based Auto Insurance
When referring to driving, do any of the following pertain to you?
- You don’t drive much because you walk, use mass transit, or other modes of transportation most of the time.
- You work from home most of the time or all of the time.
- You are in college
- You have a second car that you hardly use.
If any of the above is true, you could be paying more for your car insurance than you have to, according to NerdWallet.
Most car insurance companies offer what is known as Mileage-Based or Pay-Per Mile insurance, which could save you money in the long run.
If you fall into any of the categories, chances are that you drive less than what the average American drives in a year.
With that said, Pay-Per Mile insurance is exactly what it sounds like: you pay a base rate and then additional money per mile that you drive.
Just like traditional car insurance, your base rate which is paid monthly is determined by such factors as gender, age, and car make and model.
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The number of miles that you drive is usually tracked in one of three ways:
- A device can be attached to your car that will track your mileage
- An app is used to track the mileage
- You send in a photo of your odometer every month for the car insurance company to calculate your pay per mile.
You may have to disclose your driving habits such as hard braking, speed, what time a day you drive the most, and how much and how long you drive in order for you to qualify for the coverage.
Although this type of insurance does sound tempting, there are a few questions you should ask your agent if you are considering switching from traditional car insurance to pay-per-mile insurance.
- Is there a daily mileage cap for pay-per-mile insurance?
- Are you tracked by a plugin device, an app, both, or something else?
- Is the device linked or app linked to a specific car or driver?
- What information is being tracked?
- What driving behaviors can give you a discount?
- Can your rates be increased based on your driving behavior?
If you are not comfortable sharing your personal driving information and driving habits, pay-per-mile car insurance may not be for you.
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