Pay Per Mile insurance is a unique type of car insurance policy that determines how much you pay for your insurance premium by the number of miles you drive. 

In Washington state, Pay Per Mile insurance is still a fairly new program and is only offered by three insurance companies: Allstate, Metromile, and Nationwide.  

This type of pay by mile car insurance policy has become increasingly popular among folks who are:

When you spend less time on the road, you also reduce the chance of getting into car accidents. A Pay Per Mile policy allows insurance companies to consider this lower risk in evaluating a driver's premium and charge only by the miles driven. 

In other words, the less you drive, the lower your premium is under Pay Per Mile insurance. 

All of the coverages: liability, collision, comprehensive, uninsured motorist, and personal injuries protection are available under Pay-Per-Mile insurance policy. 

The only difference is how the premium is calculated. 

There are two rates that you will see in your insurance quote:

• There is a base rate. This is a daily fixed premium regardless if you drive or not.
• There is a per-mile rate. This is a variable premium that is only charged when you drive.

Both the Daily Rate and Per Mile Rate are determined by the same factors as a traditional car insurance premium rate:

A driver’s age is another key factor in premium determination. Drivers under the age of 25 are considered by most insurance companies as young drivers and typically have higher insurance rates. 

In general, a married couple has a lower rate than non-married individuals.

Driving history includes any at-fault accidents and moving violations. Some companies may consider the frequency of your claim history regardless if the accidents were your fault or not.

Year, make, model of the insured vehicle.

Safety rating, cost of repair, statistics of thefts, types of car are all factors used to determine insurance premium. 

Some common examples:

• Sports cars cost more to insure than sedans.
• High-end luxury cars will cost more: the more expensive the car is, the more it will cost to insure. 
• Cars with higher safety rating cost less than another with less safety features. 

Location, specially the zip code, of where your car is regularly parked at night will have a considerable impact on your insurance premium.

The presence of prior insurance will always result in a more favorable rating on a policy. Certain insurance companies may even require their new customers to have a minimum length of continuous prior insurance to qualify. 

If you are driving an average of 650 miles a month or less than 8,000 miles annually, you are a great candidate for the Pay-Per-Mile policy.

Our recommendation is to ask your insurance agent to provide a comparison breakdown using 3 different mileage scenarios: 

This way you can have a better idea of what your Pay-Per-Mile premium might be including fluctuations in miles driven. It is especially useful if your premium is near the breakeven point compared to traditional insurance.

Here at AYAO Insurance, we offer both Pay-Per-Mile and traditional auto policies in Washington state. By having access to both programs with the same insurance provider, we are able to provide the flexibility of toggling between them.

So if your driving habits or work situation have changed, we can help you to easily switch back to the traditional policy and vice-versa. 

Most Pay Per Mile insurance companies will have a maximum single day mileage charge built into the program. 

For example, Milewise with Allstate has a 250-miles single day cap, which means if your per-mile rate is 6 cents, the most you will be charged for a single day is $15. 

This feature is designed to give drivers the peace of mind of knowing that even if they go on a long road trip, their account will not result in an unexpected large amount. 

To get started on a Pay-Per-Mile policy, you will need to set up an automatic payment account and deposit a small down payment as the initial payment.

There is a minimum account balance that you will need to maintain. If your account balance falls below the minimum, your insurance company will automatically replenish the account. 

You may also deposit additional funds on your own to avoid automatic replenishment.

In order for insurance companies to accurately determine the number of miles driven, you are required to install a secured device into OBD-II (On-Board Diagnostic II) port for each of your cars enrolled in the Pay-Per-Mile policy. All cars built after January 1996 are equipped with an OBD II port.

The OBD II port is usually found under the bottom left area of your dashboard and beneath the steering wheel column. 

Here is a helpful video that shows how to find and install the device: How to Install an OBD2 Device - Quick Installation.

When plugged in correctly, this secured device allows accurate mileage readings from your car to properly calculate your per-mile premium.