If you haven't been driving much due to working from home, you might be looking to cut back on your auto bills. If you are, you may be able to save money on your auto insurance by using a pay-per-mile policy. Here is what you need to know before you make the switch.

Check State Eligibility

One thing to keep in mind is that you may not be able to purchase pay-per-mile auto insurance based on where you live. There must be an insurance provider that offers pay-per-mile auto insurance in your state. It is most common to see this insurance offered in states that have big cities where people are not driving that much.

Know Your Driving Is Tracked

When you use a pay-per-mile auto insurance, know that your driving will be closely tracked to see how many miles you are driving. Many people are uncomfortable with their car insurance company knowing how many miles they drive per day, the exact locations that they go, and how fast or slow they apply the brakes. While this is necessary to see the benefits of only paying for the mileage that you use, it may not be right for everyone. It typically involves plugging a device into your car that syncs to an app on your phone to transmit the data to the insurance provider.

Know The Factors That Determine Your Premiums

Pay-per-mile auto insurance does not just factor your mileage when determining your premiums. It also uses the same factors that normal auto insurance uses, such as your driving history, the type of vehicle that you have, your age, and gender. If you're a teen that only drives a mile or so per day to get to and from school, you still have other factors that can increase your insurance policy. You can also receive all of the types of coverage that is offered with traditional car insurance, such as collision and an uninsured motorist policy. 

Understand How Billing Works

The billing for a pay-per-mile auto insurance policy is a bit different from what you may have used in the past for traditional insurance. You will receive a policy that is valid for a 6 month period, but your billing will be monthly based on how many miles you drive. This means that your actual premium can go up and down each month, even though your insurance provider will give you a base cost with an estimate based on the previous month of use.

For more information on whether a pay-per-mile insurance policy would be a good fit for you, talk to an auto insurance company near you.