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Despite saving as much as 30 percent, pay-as-you-drive insurance has a lot more haters than it did a year ago

Half of Americans would never consider using pay-as-you-drive auto insurance.

That’s up significantly from just over a third last year, according to a new survey of 1,000 adults from The rate comparison site also suggests a possible cause: People don’t understand what pay-as-you-drive is.

“Most Americans incorrectly think that pay-as-you-drive insurance programs monitor for drunk driving and driving in high-crime neighborhoods,” the site says. “They do not.”

But it’s understandable people would be confused, as we’ll explain in a minute. First, here’s what PAYD does usually monitor, and how much it can save you…

Does it pay to PAYD?

Millennials are the most likely to use pay-as-you-drive, according to the study — which is good, since they best stand to benefit.

PAYD programs can only lower your rate, not increase it. As we wrote last year, discounts are usually 15-30 percent. But they can be higher if you drive rarely, and negligible if you’re a bad driver.

When you sign up, you get a tracking device that plugs into your car’s diagnostic port. Different companies track different things, but you can bet they want to know…

  • The distance you drive (lots of miles?)
  • How fast you drive (above 80 mph?)
  • How safely you drive (braking hard frequently?)

Some may also want to know if you drive late at night.

This kind of data gives them a better sense of how risky a driver you are, and probably how risky drivers in general are. (It also likely helps insurers settle disputes about fault.) If you’re safer than they assumed, you’ll save money.

Misconceptions and names abound

The number of people who said they’ve heard of pay-as-you-drive insurance is down from a year ago,’s study found. That doesn’t make much sense until you realize how many variations of the program exist.

Most major insurers now offer some kind of PAYD discount — but they all track somewhat different things and have different names…

Not all of the insurers who offer PAYD offer it in all states. And to make it worse, even the idea of measuring your driving habits for a discount is called different things — including “telematics insurance” and “usage-based insurance.”

Since the name for PAYD isn’t settled, it’s easy to see why 26 percent of study participants said they didn’t understand how it worked. And now there’s a new type of PAYD currently available in four states.

MetroMile: Pure pay-as-you-drive

MetroMile is an insurance startup that uses a “a brand new model designed for people who drive 10,000 miles a year, or less.” They call it per-mile insurance. Instead of tracking your driving for a discount, this actually sets your basic rate. For drivers who fit the bill, it could save $500 a year, company CEO Dan Preston told

Pay-per-mile insurance might make sense for people who live in walkable (or bikable) urban areas, but it also makes sense for older Americans who don’t drive much — if they can be talked into using it.

Only 36 percent of people ages 50-54, and 28 percent of those over age 65, said they were interested in pay-as-you-drive. Another 27 percent said they weren’t interested because of privacy concerns.

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Meet the Author

Brandon Ballenger

Brandon Ballenger


Ballenger is a writer for and its first political columnist.

Budgeting & Saving, Home, Lifestyle

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