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How Does Pay Per Mile Insurance Work?

Car insurance is an important part of owning a vehicle. It provides protection for you when you drive and ensures that you are covered if you are in an accident. However, the costs of insurance have seemed to increase a lot over the years. This can be bothersome for some people, especially those who do not drive very often.

Fortunately, there is an alternative hitting the market that can be a cheaper option for those who do not drive very much. Pay by the mile insurance plans provide an option for drivers who only drive occasionally or only short distances. Velox Insurance offers this type of insurance to provide an alternative for occasional drivers.

After years of study and the various insurance companies that use wireless devices to keep track of their customers’ driving habits, new data has been discovered that show a better picture of a person’s likelihood of getting into an accident. The insurance industry has come to the realization that those who drive less are less likely to have an accident.

Due to this correlation, companies such as Velox Insurance, have decided to reward those drivers with lower cost insurance rates. This pay by the mile insurance option offers a cheaper alternative to standard insurance policies. The price of the insurance is based on how much you drive every month.

Most insurance companies, even for drivers who drive infrequently, place customers in a risk pool. This determines the cost of your premiums. With a pay per mile policy, the premiums are determined by your actions. You pay less when you drive less, but still maintain full coverage.

How is the Pricing Determined?

The average driver for the nation drives about 12,000 miles per year. This is the mileage often considered when insurance policy prices are determined. However, if you drive less than the average in a year, you are probably overpaying for your insurance policy. Therefore, the pay per mile option may be a good idea for you to consider.

The typical per mile policy will charge a low rate per month. You will then be charged a set rate per mile. This pricing is often just a few cents for every mile you drive. If you drive a little more in one month, your premium will be a little higher. However, if you drive less in a month, your premium will also be less. For those who drive very little each month, they can save hundreds of dollars every year on their policy.

How do They Keep Track of the Miles?

For several years now, there have been insurance companies that have been using a device that can be easily plugged into a vehicle. This device keeps track of all the miles you drive in a month. This allows the insurance company to keep an accurate record of your mileage to provide you with lower monthly rates.

Most vehicles produced after 1995 will work with any of these plugin devices. You simply plug in the device and it immediately begins to keep track of your mileage. The information is continuously streamed to the insurance company to ensure accurate accounting of your mileage.

Is the Pay per Mile the Right Option?

If you are a driver with a clean record and drive less than 12,000 miles a year, this car insurance option has the potential to save you a lot on your policy premiums. The less you drive, the lower your costs will be each month. However, if you frequently drive over the average, this plan may not be for you.

Even at a price of a few pennies a mile, driving more than the national average can end up being quite expensive. If you underestimate how much you tend to drive, you may be in for a shock on your bill. For example, you may think your trips out are short and infrequent, but in reality, you may be driving a lot farther.

Before deciding on this option, you can always keep track of your mileage for an entire month. Most vehicles have a trip meter. You can set it on the first of the month and check it at the next first. If your mileage is under a thousand, this plan may be right for you. If it is over, you might want to stay with your current policy.

Other Things to Consider

If you are an occasional driver, this plan could be a good fit for you. This can even be a good fit for those with a less than perfect driving record. However, you should always get a quote before making the switch. Accidents, tickets, and other violations can increase your costs, just as they would with any insurance policy.

There are some insurance companies that only use the in-car device to keep track of your mileage. However, there are some that do monitor your driving habits. In some cases, driving frequently at night or braking hard at a stoplight could have the potential to increase your rates. It is important that you discuss these things with your insurance agent.

Some insurance companies even provide daily limits on the per mile rate. This can be a benefit for those who take the occasional long trip. However, it may be a good idea to discuss these rates with the insurance agent if a long trip is a possibility for you. This is especially important if those occasional trips have the potential to raise your mileage above the national average.


Velox insurance is adding the pay by mile insurance program to their products to give drivers more options to save on their insurance costs. If you are an infrequent driver with a good driving record, you could end up saving hundreds of dollars on your yearly premiums.

If you work from home, are a stay at home mom, or are retired, and do not get out very often, there is no reason for you to pay as much as a daily driver would. Getting a quote on a new policy does not cost a thing and could save you a lot of money.

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