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Could pay-per-mile insurance save you big bucks?

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Theo Thimou, Clark.com

Looking for a new way to save money on your auto insurance?

If you live in a metro area and don’t have too extreme of a daily commute, you should check out the world of pay-per-mile insurance.

RELATED: How to get a cheap rental car — Clark Howard style!

Don’t put a lot of miles on your car? Check out this insurance!

You’re used to the traditional insurance model, but there’s a new option out there that’s worth a look. It’s called pay-per-mile and the leader in the field right now is a company called Metromile.

The basic idea with pay-per-mile insurance is that you pay a base rate each month and then also a per-mile rate on top of that.

In the example given below, the per-mile rate is set at 3.2 cents/mile.

metromile rate chart

Metromile says it sets your base rate by factoring in your age, credit history (state specific), type of vehicle, driver history and length of prior insurance (also state specific).

“It’s great for people who drive under 200 miles a week, which happens to be 65% of U.S. drivers,” Metromile CEO Dan Preston says in a video.

And here’s the nice thing: You won’t be charged for the miles you drive above 250 a day (150 in New Jersey). So you can still take all the road trips you want!

Metromile is currently available in California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia and Washington. You can join the wait-list to be notified when it becomes available in your state.

Your mileage is monitored with a telematics device that plugs into you OBDII port — a common feature on most cars that are 1996 and newer.

obd II port metromile

Now, you may be sitting there saying, “Wait, isn’t this the same thing that Progressive’s Snapshot does? Or that Allstate’s Drivewiseor State Farm’s Drive Safe and Save program does?”

Ah, but there’s one big difference!

Unlike those services, Metromile says its pay-per-mile business model doesn’t focus on how fast you drive or how hard you brake. They just keep a tight focus on your odometer reading.

You can also keep track of your trips using the free Metromile app on your smartphone. The app includes features like a car locator and street sweeping alerts for in-town drivers.

A few other services out there that are similar to Metromile include Milewise through Allstate and Esurance Pay Per Mile, which is also owned by Allstate. The Esurance option is only available in Oregon at this time.

Money expert Clark Howard’s take on the pay-per-mile insurance model is simple — he loves it!

“Motorists who log mega-miles may cry foul about the idea of [pay-per-mile], but here’s how I see it: You already pay more for gas and maintenance, based on how much more you use your car versus a more casual use motorist. So extending that idea to insurance seems to make perfect sense,” Clark notes.

RELATED: Here are the most & least expensive states for car insurance in 2018

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