Working From Home? You Can Save Over $1,000 a Year By Doing This.

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Changing your car insurance when you use your car less often can save you money.


Key points

  • Switching to pay-per-mile car insurance can save you more than $1,000 a year on car insurance premiums.
  • Pay-per-mile car insurance offers the same coverage as traditional policy, but your premiums are based on the number of miles you drive.
  • Pay-per-mile car insurance is best for low-income drivers.

The number of people working from home has skyrocketed since the pandemic. Although many workers have returned to the office, 92% of workers expect to work from home one day a week and 80% expect to work from home at least three days a week. The national average for car insurance premiums is $2,875 per year. By converting your auto insurance to a pay-per-mile policy, you can save $1,000 or more per year.

What is premium car insurance?

Pay-per-mile car insurance is for low-income drivers. It offers the same coverage as a traditional policy but your monthly payment is based on the number of miles you drive. Drivers have more control over their auto insurance rates compared to traditional policies.

Insurance companies track the number of miles you drive through telematics or take a picture of your odometer and send it to the insurance company. Telematics is a technology that monitors vehicles in real time via GPS. It can be built into a car like a Tesla, or you can plug the device into your car’s lighting system.

How much is pay-per-mile car insurance?

Car insurance premiums vary by insurance company and driver. Your rate usually consists of two parts: the monthly interest rate and the variable cost (cost per mile). The starting rate depends on factors such as gender, age, location, and driving history. The variable portion of the cost is based on actual miles driven. Your monthly payment varies from month to month.

For example, a 35-year-old single man with a good driving record can pay as little as $60 per month and $0.07 per kilometer that month. If he drives 500 miles in a month, his monthly premium is $95 ($60 base + $35 variable). That’s a 60% savings from the average price of $240 per month. Assuming the driver continues to drive 500 miles per month, over a year that equates to over $1,700.

Should you get pay-per-mile insurance?

This type of car insurance is ideal for low-income drivers — those who work from or near home, use public transportation, retirees who don’t drive often, college students who don’t travel, and drivers with multiple cars. If you drive a lot of miles and travel long distances, then a traditional plan may be best for you. When you get your quote from the insurance company, compare rates on traditional and pay-per-mile rates to see which one is the cheapest.

Pay-per-mile has become more popular as insurance companies can now offer comprehensive and affordable policies to meet the needs of drivers. While many workers are returning to the office, many drivers are driving less than before. If you don’t drive a lot, you may be paying more for your car insurance. Switching to auto insurance that is based on the number of miles you drive can save you $1,000 or more per year.

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