Gianetta Palmer is a writer for CarInsurance101.com, copywriter, and essayist. Her work has appeared in EverydayHealth.com, Healthline, and The Dyrt Magazine. She is the author of Scrunchie-Fried and writes a lot about car insurance in her spare time.

Full Bio →

Written by

Melanie Musson is the fourth generation in her family to work in the insurance industry. She grew up with insurance talk as part of her everyday conversation and has studied to gain an in-depth knowledge of state-specific car insurance laws and dynamics as well as a broad understanding of how insurance fits into every person’s life, from budgets to coverage levels. She also specializes in automa...

Full Bio →

Reviewed by Melanie Musson
Published Insurance Expert

UPDATED: Oct 28, 2020

Advertiser Disclosure

It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident car insurance decisions. Car insurance comparison shopping should be easy. We partner with top car insurance companies. This doesn’t influence our content. Our opinions are our own.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about car insurance. Our goal is to be an objective, third-party resource for everything car insurance-related. We update our site regularly, and all content is reviewed by car insurance experts.

Pay-As-You-Go Car Insurance Summary
Insurance FactsDetailsFrom The Experts At...
Number of Auto Accidents in 20176,452,000nhtsa.gov
Number of Miles Driven in the US in 20163.22 Trillionnpr.org
Most Expensive Insurance by StateLouisiana - $1,443.72iii.org
Least Expensive Insurance by StateVermont - $762.59iii.org
Number of Drivers With Usage-Based Insurance in the US3 millionedmunds.com
Get Your Rates Quote Now

Compare RatesStart Now →

Pay-as-you-go auto insurance is a fairly new phenomenon, but it’s gaining in popularity as environmentally-conscious and budget-savvy drivers search for new ways to lower the cost of their insurance.

Who offers the best pay-as-you-go car insurance (or “pay as u go car insurance”)? Many insurers are now offering these programs, and they can be a good choice for some consumers.

If you drive infrequently, it might be worth considering a usage-based insurance policy that lets you buy insurance by the mile.

Which is the best pay-as-you-go car insurance company? How much can I save with pay-as-you-go car insurance?

Different companies handle the policies differently, so it’s worth investigating individual insurers before choosing the best company for your affordable car insurance policy.

Before learning about who are the best pay-as-you-go car insurance companies, compare great pay-as-you-go car insurance quotes for usage-based insurance policies in your area now by entering your ZIP code into our FREE tool above.

Table of Contents

Which top brands offer pay-as-you-go car insurance?

Who offers the best pay-as-you-go car insurance rates? Work to find the numerous insurance companies that provide usage-based policies with different benefits. If you’re looking to compare pay-as-you-go car insurance, read on.

Free Car Insurance Comparison

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

 Secured with SHA-256 Encryption

Progressive Insurance

Can you get pay-as-you-go car insurance through Progressive? The company does not offer this product as of this writing, but they do have a smart app available.

One of the first insurance companies to introduce usage-based insurance, Progressive calls the program a “Snapshot Program.” The telematics device works with any vehicle manufactured after 1996. The maximum discount available to drivers is 25 percent.

Liberty Mutual Insurance

Does Liberty Mutual offer pay-as-you-go or mobile car insurance? Not at this time, but they do have a smart app available:

The usage-based program, “Onboard Advisor,” is primarily targeted at commercial lines. It’s used primarily to monitor the behavior of fleet drivers and maximize profits in those policies. Private auto versions may come available, however, so it’s worth asking about if you already have a Liberty Mutual insurance policy. Ready more about Liberty Mutual in our Liberty Mutual auto insurance review.

GMAC Insurance

The GMAC/OnStar discount program for safe drivers is a little different than the one offered by other companies.

Instead of using a separate telematics plug-in, GMAC utilizes OnStar technology to record a driver’s behaviors. The program only records mileage, not other behaviors, but discounts can be as high as 26 percent for qualifying members.

Free Car Insurance Comparison

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

 Secured with SHA-256 Encryption

Allstate Insurance

Who offers the best pay-as-you-go car insurance? Working out the specifics of which plan is best isn’t always easy, but the Allstate safe driving app does offer one of the larger discounts among the major insurance companies.

Does Allstate have affordable pay-as-you-go car insurance? Allstate usage-based insurance comes in second only to State Farm.

The “Drivewise” program is Allstate’s usage-based insurance, and it functions in a very similar way to Progressive’s policy. It utilizes a similar device and records the same information. Drivers can save up to 30 percent by enrolling in Drivewise.

State Farm Insurance

How big is State Farm car insurance? Pretty big, and, like the other companies mentioned above, State Farm insurance offers a smart driving app rather than a pay-as-you-go plan. They do, however, offer a substantial discount for safe drivers.

Called “Drive Safe and Save,” State Farm’s usage-based insurance discount functions similarly to Allstate and Progressive, and some customers can save as much as 50 percent on their car insurance.

Not all pay-as-you-go insurance policies are available in all states. Some insurers have only made the product available in certain areas as a test pilot, so you should always check with the insurer to make sure you can qualify.

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

 Secured with SHA-256 Encryption

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

There are two types of coverage lumped together under usage-based insurance. The first is pay-as-you-go coverage, which is insurance rates charged by each mile driven. Then there are smart driving apps, which are essentially coverage rates based on a driver’s individual habits, or a pay-how-you-drive coverage.

People who drive frequently, drive during peak traffic hours or engage in high-risk behaviors have a higher risk of being in accidents than individuals who do not.

In order to reward drivers who reduce their risk by driving less frequently, insurance companies offer coverage that charges rates based on a driver’s actual behavior.

According to IIHS, usage-based apps are just one of the many technological advances available to modern drivers. Rearview cameras, lane departure warnings, and other crash avoidance technologies help drivers avoid dangerous situations and keep their insurance costs low.

Unlike rearview cameras and lane departure warnings, however, usage-based insurance apps can actually increase your premiums if your insurance company determines that your driving behavior is unsafe.

When determining your rates, car insurance companies assume certain basic behaviors. They assume that drivers will put an average of 10,000 miles on their cars each year and that most drivers commute to work during peak traffic hours.

These behaviors put drivers at a high risk of being involved in collisions because there are so many other people on the road at those times. Individuals who drive less have a lower risk of being in accidents than those who drive a lot. Typically, insurance companies account for reduced mileage by rating drivers in two categories, as can be seen in the chart below:

Average Annual Car Insurance Rates by Commute
CompaniesAverage Annual Rates for
10 Miles Commute/
6,000 Annual Mileage
Average Annual Rates for
25 Miles Commute/
12,000 Annual Mileage
Average Annual
Car Insurance Rates
USAA$2,482.69$2,591.91$2,537.30
Geico$3,162.64$3,267.37$3,215.01
State Farm$3,175.98$3,344.01$3,260.00
American Family$3,401.30$3,484.88$3,443.09
Nationwide$3,437.33$3,462.67$3,450.00
Progressive$4,030.02$4,041.01$4,035.52
Farmers$4,179.32$4,209.22$4,194.27
Travelers$4,399.85$4,469.96$4,434.91
Allstate$4,841.71$4,934.20$4,887.95
Liberty Mutual$5,995.27$6,151.63$6,073.45
Get Your Rates Quote Now

Compare RatesStart Now →

There are two types of car insurance that can be categorized as usage-based policies: Pay-as-you-go, sometimes referred to as pay per mile or pay per km, and smart apps, otherwise known as pay-how-you-drive apps, which offer potentially discounted policies based on your driving behavior.

Pay-as-you-go policies are generally offered by specialty insurance companies like Metromile. These companies typically charge a low monthly base rate and a per-mile surcharge. Usually, car insurance mileage is calculated in a range, but pay-as-you-go plans charge you on a per-mile basis.

This could be an excellent option for people with cars driven less than 25 miles a day.

However, don’t automatically assume that the per-mile car insurance is a cheaper option. It is important to get multiple quotes to make sure you are getting the lowest possible rate.

Smart apps are optional features on most regular insurance policies that allow your insurance company to track your driving behavior and charge you according to your risk level. This could mean that your insurance rates will go down, but for some drivers, this could actually end up increasing their rates.

What is usage-based car insurance?

Usage-based car insurance monitors a driver’s habits and modifies costs accordingly.

This means that a driver’s rates will change from one month to the next as their driving habits change. It also means that the insurance company needs to monitor an insured’s driving habits.

In order to do this, the insurance company will install a device into the insured’s vehicle. This device monitors the miles driven as well as what time of day they were driven and whether the insured made certain specific behaviors, like taking turns quickly or braking suddenly. The device then reports this data back to the insurance company, which determines the rates for the month.

Below is a chart of the average annual premium for several major insurance companies. Keep in mind that insurance rates are determined by a number of factors. For example, the average insurance rate for a medium sedan was $1,251 in 2019. The rates below are based on a nationwide average, so rates in your state may vary:

Average Annual Car Insurance Rates by Company
CompaniesAverage Annual
Car Insurance Rates
USAA$2,541.91
Geico$3,216.39
State Farm$3,267.63
American Family$3,443.09
Nationwide$3,446.70
Average$3,958.70
Progressive$4,043.83
Farmers$4,188.80
Travelers$4,444.85
Allstate$4,898.25
Liberty Mutual$6,095.54
Get Your Rates Quote Now

Compare RatesStart Now →

Of course, the device cannot get an accurate idea of a driver’s entire driving habits by focusing on such limited behaviors, but it can get a better idea of the person’s risk. The people who benefit from these programs are those who drive primarily for pleasure and who avoid commuting during rush hour. Efficient drivers with low mileage and off-peak driving hours can often get a dramatically lower premium for using a pay-as-you-go program.

Should I get a usage-based car insurance policy?

Looking to buy pay-as-you-go car insurance? Of course, in order to get the maximum discount from any insurance company, a customer must meet the mileage and behavior requirements.

It’s important to ask the insurance company how rates are calculated and whether you would be a good candidate for a pay-as-you-go insurance policy.

In some cases, a person’s rates could actually go up once the device was installed, although this is not the norm.

Other insurance companies that do not offer a driving-monitoring system may still offer you a discount if you have low mileage.

Do I have to buy car insurance if I only drive occasionally? If you utilize public transportation, work from home or only drive occasionally, you can explain this to your insurance company and provide odometer readings. You may be able to get a one-time discount that can lower the cost of your insurance without needing to submit to a behavior-monitoring program.

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

 Secured with SHA-256 Encryption

Who offers the best pay-as-you-go car insurance?: The Bottom Line

So, who offers the best pay-as-you-go car insurance quotes? Only you know what works best for your needs.

As usage-based insurance grows in popularity, more insurance companies will begin offering it. Time will tell whether the deep discounts will continue for drivers. In the meantime, comparison shopping and carefully selecting the best insurer for your needs is the best way to ensure you get the best possible rates for the policy that you need.

Ready to buy pay-as-you-go car insurance? Now that you know more about who offers the best pay-as-you-go car insurance rates, compare rates for car insurance in your area by entering your ZIP code into our FREE tool below.

Frequently Asked Questions: Who offers the best pay-as-you-go car insurance?

Below are some of the most frequently asked questions regarding pay-as-you-go car insurance:

#1 – Is pay-as-you-go car insurance cheaper?

Whether or not pay-as-you-go car insurance is cheaper depends on how much you drive. If you only drive a couple of times a week and only short distances you could save a bundle by purchasing pay-as-you-go car insurance.

If, however, you drive to and from work every day, take trips to visit family a couple of times each year, and drive to take care of basic chores like grocery shopping, you might be better off with a traditional insurance policy.

Free Car Insurance Comparison

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

 Secured with SHA-256 Encryption

#2 – Can I report a lower mileage than I actually drive?

Usage-based insurance has a monitor of some kind, either a device that is inserted into your vehicle or an app on your phone that allows them to track your mileage. Reporting a lower mileage or altering a monitoring device in some way is considered a form of insurance fraud, according to the FBI.

Insurance fraud can cost you thousands of dollars in court fees and even come with jail time, so it isn’t worth the risk.

#3 – Who has the cheapest car insurance? How do I find the best car insurance?

Each car insurance company has their own rating system and specific discounts they offer, so which company is cheapest will depend on your specific situation. Geico and USAA typically have the lowest overall rates, but this varies from state to state.

You may also find that you are eligible for discounts through other insurance companies that can earn you a lower rate elsewhere, so you will want to get quotes from multiple companies to make sure you are getting the best possible rate.

#4 – Can you buy car insurance by the day?

There are some situations where you can buy car insurance for the day, such as when you are renting a car. If you own a vehicle and will be doing very little driving, a pay-as-you-go plan might be a better option for you.

#5 – What is the best pay-per-mile car insurance?

Every company is different, so there is no way to determine which company is the best across the board, but there is definitely a company that is the best for your specific needs. Getting multiple quotes is a good way to find out which company has the best coverage for your needs.