UPDATED: Mar 18, 2020
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Allstate’s Milewise program allows drivers to pay based on the number of miles they actually drive, using an unusual prepaid system of billing. Aimed at drivers with low annual mileage including stay-at-home parents, retirees, and telecommuters, the plan promises the potential to pay a lot less for car insurance than traditional policies.
Milewise operates on a prepaid account system, where the insured puts money into the account and sets up automated replenishing of the account via an associated credit card. Currently offered in only a few states, it appears to be something of a trial program for Allstate, which is already one of the largest car insurance companies in the country. Allstate’s recent slip out of the top three (Progressive took the number three spot in 2018), however, may well have something to do with the company’s decision to try something new.
Like many usage-based insurance programs, Milewise uses a plug-in device that records information from the vehicle. Allstate’s other usage-based program, Drivewise, has been shifting away from the use of the device in recent years and uses mainly an app; the device is only used in a handful of states at this point. Milewise, however, does not use all of the driving habits information that Drivewise does; it is only interested in mileage to calculate the cost.
While some programs that give discounts for driving fewer miles allow self-reporting of mileage, this program calculates mileage on a daily basis, which makes the device necessary for the sending of ongoing data back to the system. Of course, there is also an app which tracks your miles driven and allow access to your account, where you can see funds being deducted as well as when you can expect it to pull more funds from your credit card.
Currently, Milewise is offered in three states: New Jersey, Oregon, and Texas. The company plans expansion into other states in the near future, but how quickly that happens may depend on the success of the program where it is currently available.
How Milewise Works
Milewise is different from other pay-as-you-go programs in that it takes the term literally. When you start the program, you put money into an account, and every time you complete a trip, the “cost” of that trip is deducted from the account.
Insurance is billed based on a daily rate, which is calculated using the same factors that are used to determine traditional insurance rates. This rate is charged each day regardless of whether or not you drive your vehicle.
A per-mile rate is also calculated, and you pay that same amount for every mile you drive. When you do drive, the device that is plugged into your car records how many miles you drive from start to finish. When the trip is complete, the number of miles times your per-mile rate is deducted from your account. That means that if you take multiple trips in one day, there will be multiple deductions from the account.
Milewise stops charging you once you hit 150 miles for the day, which means that a road trip will not mean a sudden, large deduction from your account. When the account hits a minimum threshold for balance, more funds are automatically added from the credit card you link to the account. You can track all of this through the app, which is linked to the device and your Allstate account.
Rather than earning a discount over time for driving habits, this program actually charges you as you use it, meaning no more monthly bills, and no waiting through an evaluation period to see what kind of discount you have earned.
What Milewise Records
Milewise uses only the miles driven to calculate how much you pay each time you drive, but it records more than that. In addition to your mileage, the device records:
- Time of day
- Specific driving events like hard braking (what other driving events are included isn’t explained)
The information that is recorded is provided to the user in the app, where feedback is provided to the driver regarding driving habits.
How Information Is Used
Again, only the actual miles driven is used to determine how much the driver pays.
The other information is simply used to provide feedback; it is not used to calculate any rate increases or discounts. Drivewise is the more comprehensive program that uses this information to calculate discounts.
Feedback will appear in the app, where the insured can view trip history, maps of trips taken, and feedback on driving habits aimed at encouraging safer driving. While it is likely Allstate can access this information, the site states they do not use it to determine rates. It is mainly meant for the driver’s personal information.
As we have already discussed, Milewise does not give you a discount in the way that other usage-based programs do. Instead of calculating a rate for the policy term and then applying discounts by percentage, how much you pay is determined by how much you drive.
The Allstate site does not say whether or not traditional discounts apply to the calculation of your base and per-mile rates. They are calculated using the usual rating factors – age, driving history, and type of vehicle among others – but while a traditional policy would then apply discounts like multi-car, auto/home bundling, and anti-theft devices to discount the calculated rate, it is unclear if this program does something similar.
This approach to billing makes anticipating your insurance costs easier. Other usage-based programs make big promises of large discounts but rarely deliver, with average discounts well below the advertised potential. Drivers with these programs will not know what kind of discount they’ll get until they have been in the program for a while; Milewise makes everything clear from the start.
Eligibility for Milewise
Milewise is only available in a limited number of states, but as far as we can tell anyone can sign up, as long as the driver and vehicle qualify under Allstate’s usual guidelines for coverage.
It appears to be open to both new and existing customers, although it is likely existing Allstate customers will have to cancel their current policy and start a new one under the Milewise program.
In general, vehicles must be 1996 or newer to use the plug-in devices associated with usage-based insurance. The Allstate site does not say that specifically for this program, but that’s a standard due to the technology needed to record and transfer information via the device.
Milewise has two parts: the in-car device, and the app.
The device will be mailed to you and easily installs into the Onboard Diagnostic (OBD-II) port in your vehicle. In most cars, that’s located under the dash. While the device comes with directions, this handy guide from CarMD can help you locate the port in your particular vehicle.
With the device plugged in, the app can be downloaded and installed on a mobile device. The app is mainly used to track information about the program; it is possible that the program could still be used without installing the app, but that is not stated one way or the other on the site. The app does, however, offer important billing information and let you stay on top of what you’re spending, so it is useful and most drivers will likely want it installed.
How Milewise Stacks Up
It is difficult to compare Milewise to the other usage-based programs out there since there is only a handful that operate on a per-mile basis.
Metromile is the biggest competitor for Allstate’s new program. It is established and operates in more states, but Allstate can catch up and exceed them for coverage area quickly if they want to given the fact that they are already operating nationwide.
The Metromile program still uses a monthly billing system with the bills adjusted each month based on the actual miles you have driven. The Allstate approach to billing provides more immediate information and no surprises on a monthly bill. That said, some drivers may find it frustrating to have funds pulled from their account to replenish the Milewise funds at unexpected times rather than bills at regular intervals.
Metromile sets its daily billing limit higher than Milewise, billing tops out at 250 miles a day rather than 150, which could definitely save you some coin on long road trips.
It is difficult to consider Esurance a competitor since they are owned by Allstate and only offer their pay-per-mile service in Oregon. That program uses a six-month policy term with monthly billing and not the daily billing of the parent company’s option.
Overall, this program offers a lot of transparency in the billing compared to other usage-based programs and is really the only program in which you actually pay as you go – on an immediate basis. It may take a while for users to get used to the new billing setup, which might make budgeting for your monthly car insurance costs difficult until you have used it for a while and start to see what the actual payments look like over time.
This is a really new approach to insurance billing, and it has not been around long. It will take some time and probably expansion into more states to really get an idea of how the program works for actual drivers. Allstate shows you how much you save over a traditional policy as part of the app, and the less you drive, the more you save.
The site does not state whether there is a penalty for canceling if the program does not work for you or you aren’t seeing the savings. Other such programs do have penalties, so it is possible and something to be aware of.
How successful this program is when compared to Drivewise, or to other usage-based programs, is yet to be seen. There is little in the way of customer feedback on the program available at this time.
The Bottom Line
Milewise is a fledgling program that may offer great savings for people who do not drive much. If you commute more than a few miles, run the kids around to endless soccer games, or are simply on the road a lot, it is probably not for you. If you fit into the former category and live in one of the limited areas where the program is offered, it’s probably with a try; as far as we can see there is no real risk to the program, although there is a possibility of a cancellation penalty if you change your mind. It will take some time before the verdict is really in on Allstate’s new plan.
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