Is Pay-Per-Mile/Pay-As-You-Go Car Insurance Available in Massachusetts?

If you don’t drive often, you may be intrigued by the idea of pay-per-mile/pay-as-you-go insurance models.

After all, if you only drive 5,000 miles per year, why should you be paying the same for car insurance as someone who drives 18,000 miles per year?

At Berry Insurance, we’ve gotten this question a lot -- especially since the COVID-pandemic hit and people started working from home and driving less. Well, we answered their inquiries and we’re going to answer yours too!

In this article, we’ll explain what pay-per-mile/pay-as-you-go car insurance is, if it’s available in MA, and go over some other auto insurance saving opportunities that could be right for you.

What is pay-per-mile/pay-as-you-go car insurance?

Pay-per-mile and pay-as-you-go insurance, allows you to pay for your insurance based on how much you drive. Many companies who offer it use telematics, which can either be a tracking device on your car, or a phone app to track your driving.

Pay-per-mile insurance allows you to pay a certain rate, based on the amount of miles you drive during your policy term. You have a base rate, which factors in things such as your driving history, location, vehicle, etc.; and a per-mile rate, which is charged based on how much you drive.

Pay-as-you-go insurance is similar, but your rate is determined based on your driving habits, so if you have bad driving habits, your rates could be increased.

Is pay-per-mile/pay-as-you-go car insurance available in MA?

Most states offer pay-per-mile or pay-as-you-go insurance, but as of this article's publication date, Massachusetts unfortunately does not offer it.

But, you could be eligible for a low-mileage discount

Can’t get pay-per-mile or pay-as-you-go insurance in MA, but still want to be credited for your minimal driving?

Don’t worry. Most insurance companies offer low mileage discounts to drivers who do not drive often.

After all, the less you are on the road, the less risk you are at of having a claim and costing the insurance company money.

The average American drives approximately 13,000 miles per year, but if you drive less than 7,500 miles per year, you may be eligible for a discount from 5-10% depending on how little you drive, and the rate your insurance company designates for you. 

Generally, the less you drive, the greater your discount will be.

Other ways to save on car insurance

If you’re interested in saving more money on your insurance (which, who isn’t?) there may be some more options for you.

Bundle policies

Many insurance companies offer incentives for the more business you provide them. By bundling your car insurance with other policies (such as homeowners/rental) within the same insurance company, you may be able to save approximately 5-25 % on your policies.

Insure more than one car with the same policy or carrier (multi-car discount)

Similar to bundling policies, you can also earn discounts for insuring more than one vehicle in the same household. 

Pay via EFT/ACH or pay ahead

Paying for your auto insurance through electronic funds transfer (EFT), automated clearing house (ACH), or paying the premium up front can eliminate billing fees.

If you’re comfortable with your payment automatically withdrawing from your bank account each month, or if you can afford to front the premium, these methods can save you both time and money.

Choose a higher deductible plan

Of course, you can also lower your premium by selecting an auto insurance plan with a higher deductible. 

Doing this means you’ll be paying less per month, but will have to pay more if you get in an accident, so if you select a higher-deductible plan, you’ll want to make sure you have enough money set aside in case you need to cover damages from an accident.

Ask your agent about any discounts

You can get a discount for doing the following:

• Being a member of an association (such as AAA, AARP, alumni associations, wholesale clubs, military organizations, honor societies, and more)
• Giving to a charity 
• Getting good grades (insurance companies reward both high school and college drivers for earning good grades)
• Being a safe driver (drivers without accidents or violations for a certain period – usually five years – can save hundreds on their insurance through a safe driver or good driver discount)
• Ask your agent if you are eligible for any discounts that aren’t already applied to your policy.

Remove Optional Coverages

Many insurance plans include optional coverages intended to provide services in specific scenarios. If these coverages do not apply to you, or if you have another service that provides similar coverage, you should not be paying the extra amount for them.

Collision:

Collision insurance offers coverage to repair or replace your vehicle if it is damaged in an accident. If your vehicle is older and the value is low enough that you could afford to repair or replace it if it were damaged or destroyed, you may want to remove collision insurance. 

Keep in mind, if you are leasing your vehicle, or if it isn’t paid off, collision coverage is typically required.

Substitute Transportation: 

Substitute transportation insurance will pay for at least a portion of the cost of a rental vehicle if you need one due to a covered loss while it is being repaired or replaced (if you have collision insurance). 

If you have an alternative vehicle you can use, or if you are able to go without your car for a period of time, you could remove substitute transportation.

Roadside/towing:

Many insurance companies offer roadside assistance or towing insurance if your car breaks down on the side of the road and you are unable to get it to a mechanic. If you have both roadside/towing and AAA, you are essentially paying for the same coverage twice, so choose one or the other.

Enroll in telematics

Through the use of technology, insurance companies are using tracking devices to monitor driver data including speed, mileage, driving time, hard brakes, and more to determine if you are eligible for a discount.

For example, N&Drive through Norfolk & Dedham monitors driving habits to offer discounts up to 30% to cautious or low-mileage drivers. 

Telematics can not increase your premium. At worst, your premium will stay the same, but you could get a discount.

Save on insurance with an independent agency

To take advantage of all of the savings opportunities we discussed above, our best advice is to work with a local independent insurance agency (like us at Berry Insurance) who will make sure you are getting the best deals and are utilizing all savings opportunities you have.

But we know there are a lot of great Massachusetts insurance agencies to choose from.

So to get you started on finding the right match for you, check out this article: What to Look For when Selecting an Insurance Agency or Company.