Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Written by Rachael Brennan
Licensed Insurance Agent Rachael Brennan

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Jun 29, 2022

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In a nutshell...

  • Low-mileage car insurance is suitable for infrequent drivers
  • Low-mileage car insurance is commonly known as pay-per-mile or pay-as-you-go car insurance
  • Sometimes usage-based car insurance is a low-mileage policy, but not always

Drivers are always looking for ways to save money on car insurance. Some drivers skimp on coverage and get only the bare minimum liability insurance, leaving them underinsured in the event of a collision. Other drivers might qualify for significant discounts based on their driving history or other factors. A low-mileage car insurance policy is one underrated way to save money on your car insurance.

If you drive less than the national average of 10,000 miles per year, you might qualify for low-mileage car insurance. This article discusses what low-mileage car insurance is and how it can save you money. 

Of course, the best way to save money on insurance is through comparison shopping. By comparing quotes from a handful of car insurance companies, you can find the right coverage at affordable rates. 

What is low-mileage car insurance?

If you do not drive very often, you may be interested in a low-mileage car insurance policy. But what is low-mileage car insurance? There are a few different types of coverage called low-mileage car insurance. 

At a high level, low-mileage car insurance is a type of policy built for those who do not drive often. A low-mileage car insurance policy is different from a standard car insurance policy. Not everyone is eligible for low-mileage car insurance, but you can save tons of money if you are. Many drivers can save 30% or more on their car insurance by choosing a low-mileage policy.

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What is pay-per-mile car insurance?

Pay-per-mile, or pay-as-you-go car insurance, is a policy for low-mileage drivers. When you purchase a pay-per-mile car insurance policy, you can pay lower rates than standard insurance.

Car insurance applications often ask for your estimated weekly, monthly, or annual mileage. If you drive less than the national average of 10,000 miles per year, you probably qualify for a pay-per-mile car insurance policy.

Many top car insurance companies now provide pay-per-mile car insurance options.

State Availability of Leading Low-Mileage Car Insurance Companies

 MetromileAllstate MilewiseNationwide SmartMiles
New HampshireNoNoYes
New JerseyYesYesNo
New MexicoNoNoYes
North DakotaNoNoYes
Rhode IslandNoNoYes
South CarolinaNoYesYes
South DakotaNoNoYes
Washington D.C.NoYesYes
West VirginiaNoYesYes
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Nationwide SmartMiles is currently the most widely available pay-per-mile car insurance policy.

How do insurance companies track your mileage?

There are a few different ways car insurance companies keep track of your mileage.

Some companies rely on telematics or black box devices. Telematics are instruments that plug into your car’s onboard diagnostics port. These often pair with your smartphone to relay driving information back to the insurance company.

Most usage-based, or pay-how-you-drive car insurance policies rely on telematics to report driving behavior. The insurance company might not necessarily track your driving behavior for a pay-per-mile car insurance policy. Instead, the telematics device provides mileage information.

A telematics device relays information like mileage, acceleration, driving time and location, and more.

Some usage-based car insurance policies combine the best of pay-per-mile and pay-how-you-drive. Such policies offer discounts for low mileage and safe driving.

By combining the best of these discounts, you can save a significant amount of money on your car insurance. A usage-based car insurance policy is not right for everyone. If you drive more than 10,000 miles per year, this type of policy probably is not ideal.

If you have a job that requires you to commute overnight, good driver discounts are not always the best option. Driving at night or during inclement weather is considered risky driving behavior. 

Unfortunately, you cannot always choose when you drive or what kind of weather you have to endure. Regardless, insurance companies need to protect their investment. Hence why this type of driving can be considered risky behavior.

Some usage-based car insurance policies offer discounts for low mileage and safe driving.

Not all low-mileage car insurance policies rely on telematics devices. Newer cars with built-in Bluetooth capabilities can relay mileage without a telematics device. Some car insurance policies even allow you to take a picture of your odometer to prove your mileage.

You should be aware that if you exceed your estimated mileage, the insurance company might drop you from the low-mileage policy. Instead, they could automatically enroll you into a standard car insurance policy. You might even need to pay back the difference in rates.

Who needs a low-mileage car insurance policy? 

Low-mileage car insurance is ideal for many individuals who do not put a lot of miles on their vehicles. Whether you want to insure your primary or secondary vehicle, you might find a low-mileage policy to suit your needs.

Here are a few different situations where an individual could benefit from low-mileage car insurance.

City Dwellers

Many city dwellers might only take their car out for trips on the weekends. They likely rely on the metro or buses to commute to and from work. This makes sense, as inner-city traffic can be very congested. By choosing a low-mileage car insurance policy, these infrequent drivers can greatly benefit from reduced rates.

If you live in a big city with great public transportation, you might not drive your car often. If you can take public transit, bike, or walk to work, then you might not put many miles on your vehicle. With a low-mileage policy, you can be sure you have car insurance on the weekends without overpaying during the week.

Work-From-Home Employees

One aspect of the coronavirus pandemic that might be here to stay is working from home. Work-from-home employees do not actually have a commute – unless you count walking into another room. These individuals put next to no commuter miles on their car unless they need to run errands.

If you work from home and you do not do a lot of extra driving, you might look into a low-mileage car insurance policy. This type of car insurance can save you a significant amount of money.


Similar to work-from-home employees, retirees do not usually have a daily commute. Most of the miles drivers put on their cars come from commuting to work.

Have you already put in your years and are enjoying your retirement? If so, then you should look into a low-mileage car insurance policy. If you are retired and do not drive often, you can reduce your rates by seeking a low-mileage policy.

Car Collectors

Many drivers out there own a primary vehicle and a collection of secondary cars. Pay-per-mile car insurance is one option for secondary vehicles that do not often see the road. 

Whether you have a garage full or just one classic car, you might benefit from purchasing low-mileage car insurance for your secondary vehicle. Of course, you may want to look into insurance companies that specialize in insuring exotic vehicles for very expensive classic cars.

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What do you need to know about low-mileage car insurance?

It is important to make sure you meet the requirements for low-mileage car insurance. The punishment for exceeding your mileage isn’t severe, but you might have to pay higher rates. 

When you sign up for a low-mileage car insurance policy, you should ask yourself if you drive less than a thousand miles per month. If you think to yourself, “I could drive a little less often to meet that limit,” then you might want to look into other ways to save money on car insurance.

You might owe money if you get dropped from your low-mileage car insurance policy due to exceeding your mileage limits. Not every car insurance company will back bill you for exceeding your mileage, so you should read your policy documents carefully.

Once you exceed your mileage limits and get dropped from a low-mileage policy, it may be hard to sign up for one again. For this reason, you should make sure you can stay under your mileage limits to maintain cheap rates. 

What are low-mileage car insurance policies?

Low-mileage car insurance is a policy that allows you to save money based on how much you drive. Pay-as-you-go car insurance isn’t the same as pay-how-you-drive coverage, but sometimes these intersect. You might look into a low-mileage policy to save money if you don’t drive often.

We hope this article helped answer your most pressing questions about low-mileage car insurance. Whether you meet the requirements for a low-mileage policy or not, you can still save money on car insurance. Comparison shopping is the tried-and-true method for saving money on insurance. By comparing quotes from a handful of different car insurance companies, you can find suitable coverage at affordable rates.