A car you drive once a week shouldn’t be priced the same as one you drive every day. Three policy types do the math better — and they can save drivers hundreds of dollars a year for exactly the same coverage.

Pay-Per-Mile Basics

Pay-per-mile insurance (also called usage-based insurance, or UBI) charges a flat monthly base rate plus a per-mile fee. You pay for what you actually use.

Two carriers lead this market: Metromile and Nationwide SmartMiles. The structure looks like this:

• Base rate: $20–$50/month (covers parked vehicle, liability minimums)
• Per-mile rate: $0.03–$0.08/mile depending on your record and location

A driver who puts on 3,000 miles a year might pay $400–$700 total. The same driver on a standard policy could pay $1,200 or more. The savings are real — but only if you actually drive low miles.

Miles are tracked via a plug-in device (OBD-II port) or your car’s built-in telematics. The data is mileage only with some carriers; others also track speed and braking. Read the disclosure before you sign up.

Low-Mileage Discount Tiers

Most standard carriers offer low-mileage discounts on traditional policies. These are tiered — the fewer miles, the bigger the discount. Common thresholds:

• Under 10,000 miles/year: 5–10% discount at many carriers
• Under 7,500 miles/year: 10–15% at some
• Under 5,000 miles/year: 15–20%+ at a few

These numbers vary by carrier and state. The discount is applied at policy renewal, not upfront. You report your annual mileage estimate when you apply. Some carriers verify it at renewal via odometer photos.

If you report 6,000 miles but actually drove 12,000, expect a surcharge at renewal — or non-renewal. Be accurate.

Standard Policies That Flex

If your usage varies — some months high, some months almost nothing — a traditional policy with a mileage discount might beat pay-per-mile. Here’s how to decide:

• Under 5,000 miles/year: Pay-per-mile almost always wins
• 5,000–10,000 miles/year: Compare both options with actual quotes
• Over 10,000 miles/year: Standard policy with a discount is usually cheaper

One thing standard policies handle better: garaging. If your vehicle sits in a private garage or covered structure, many carriers apply a further discount. Mention it when you apply. It matters more than most people expect — theft and weather claims drop significantly for garaged vehicles.

Also consider the vehicle’s age. A 15-year-old car worth $4,000 may not need comprehensive and collision coverage at all. Dropping those on a low-usage vehicle saves money twice: lower premium and no full-coverage requirement.

A Simple Chooser

Ask yourself three questions:

1. Do I drive fewer than 6,000 miles a year? If yes, pay-per-mile is worth quoting.
2. Is the car worth less than $6,000? If yes, consider dropping comp/collision entirely.
3. Is my car garaged? If yes, tell every carrier you quote.

None of these options require giving up coverage. They just stop charging you for miles you’re not driving.

Next step: Pull your last 12 months of odometer readings (oil change receipts work) and run a pay-per-mile quote against your current rate. Get a same-day quote that works for your situation →