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.

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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...

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Reviewed by Melanie Musson
Published Insurance Expert

UPDATED: Dec 10, 2020

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  • Pay-as-you-go insurance is a type of usage-based car insurance that’s available at different car insurance providers.
  • Another name for pay-as-you-go insurance is pay-per-mile insurance.
  • Pay-how-you-drive insurance works by monitoring your driving habits.
  • Usage-based auto insurance isn’t available in all 50 states.

Pay-as-you-go car insurance is a reasonably 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-you-go insurance”)? Many insurers are now offering these programs, and they can be the right 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.

What is the best pay-as-you-go insurance companies? How much can I find cheap 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 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.

Who offers the best pay-as-you-go car insurance?

Which top brands offer pay-as-you-go car insurance? Let’s look at a preview of car insurance discounts from the top companies with pay-as-you-go auto insurance.

Estimated Pay-As-You-Go Car Insurance Programs and Their Discounts
Pay As You Go ProgramsCar Insurance Savings
Allstate DrivewiseAverage discount is between 10% and 25%.
Esurance DriveSenseDepends on the state where you live.
GEICO DriveEasyDepends on the state where you live.
Liberty Mutual RightTrackAverage of 5 to 30%
Metromile$611 or a maximum of 50%
Nationwide SmartRideUp to 40%
Progressive Snapshot$130 on average
RootMaximum savings is $900/yr or 70%
State Farm Drive Safe & Save15% savings
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See how the savings vary. Some of these usage-based insurance programs aren’t available in your state. You’ll need to ask an agent or the car insurance company if each usage-based auto insurance program is available in your state. But it would help if you still learned more about it.

Let’s examine a quick summary of pay-as-you-go car insurance. 

Pay-As-You-Go Car Insurance Summary
Insurance FactsDetailsFrom The Experts
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
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If you’re looking to compare pay-as-you-go auto insurance, continue reading this guide to learn more details about car insurance companies with a pay-as-you-go program that provides usage-based policies with different benefits.

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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 have a smart app available.

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

Their usage-based program, “Onboard Advisor,” is primarily targeted at commercial lines. It’s mainly used to monitor the behavior of fleet drivers and maximize profits in those policies.

Private auto versions may soon be available, however, so it’s worth asking about if you already have a Liberty Mutual insurance policy. Read more about Liberty Mutual in our Liberty Mutual car insurance review.

GMAC Insurance

The GMAC/OnStar discount program for safe drivers is slightly different from 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% for qualifying members.

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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% 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, provide 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% 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.

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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. There are smart driving apps, which are essentially coverage rates based on a driver’s habits, or pay-how-you-drive coverage.

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

To reward drivers who reduce their risk by driving less frequently, insurance companies offer coverage that charges rates based on their 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.

Pay-As-You-Go Car Insurance Summary
Insurance FactsDetailsFrom The Experts
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
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Unlike rearview cameras and lane departure warnings, however, usage-based insurance apps can increase your premiums if your insurance company determines that your driving behavior is unsafe.

Pay-as-you-drive Car Insurance (PAYD) vs. Pay-how-you-drive Car Insurance (PHYD)

There are two types of usage-based car insurance policies:

  • Specialty insurance companies like Metromile generally offer Pay-as-you-drive policies. These companies typically charge a low monthly base rate and a per-mile surcharge.
  • Pay-how-you-drive and smart apps (otherwise known as pay-how-you-drive apps) provide discounted policies based on your driving behavior.

These behaviors put drivers at risk of being involved in collisions.

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 shown 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
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Usage-based car insurance programs that monitor your driving behavior for savings are known as pay-how-you-drive (PHYD) car insurance.

When determining your rates, car insurance companies assume certain basic behaviors. They think 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.

How does pay-per-mile car insurance work?

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 essential to get multiple quotes to make sure you are getting the lowest possible rate.

Smartphone apps are optional features on most standard 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 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 drivers’ 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.

To do this, the insurance company will install a device into the insured’s vehicle.

This device monitors the miles driven, the time of day they were driven, and how the insured behaved, like turning 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 several factors determine auto insurance rates.

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
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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 better understand the person’s risk.

The people who benefit from these programs drive primarily for pleasure and avoid commuting during rush hour. Efficient drivers with low mileage and off-peak driving hours can often get a dramatically lower premium by using a pay-as-you-go program.

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Should I get a usage-based car insurance policy?

Are you looking to buy pay-as-you-go car insurance? Of course, 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 go up once the device is installed, although this is not the norm.

Other insurance companies that do not offer a driving-monitoring system may still provide 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 sometimes, 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.

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

So, who provides affordable pay-as-you-go insurance? 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. Auto insurance companies with a pay-as-you-go program are ahead of the game.

In the meantime, comparison shopping and carefully selecting the best insurer for your pay and go car insurance needs are the best way to ensure you get the best possible rates for the policy you need.

Ready to buy pay-as-you-go monthly 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 necessary chores like grocery shopping, you might be better off with a traditional insurance policy.

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

Usage-based insurance has a monitor of some kind, either a device 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 its rating system, and the specific discounts they offer, so which company is cheapest will depend on your particular situation. GEICO and USAA typically have the lowest overall rates, but this varies from state to state.

You may be eligible for discounts through other car insurance companies that can earn you a lower rate elsewhere, so you will want to get quotes from multiple companies to ensure 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 a company is the best for your specific needs. Getting multiple quotes is an excellent way to determine which company has the best coverage for your needs.

#6 – Who has the best rates for annual mileage under 10K?

Metromile offers competitive pricing structures for those who drive under 10,000 miles per year.

#7 – Who offers the best discount for daytime drivers?

Progressive has a usage-based program called Snapshot, which will record your driving habits, such as daytime driving, and apply applicable discounts.