Reviewed and approved by Samuel Corso, licensed Texas insurance agent.

Published September 9, 2026 · Updated October 1, 2026

Does usage-based car insurance save money in Texas?

Car insurance priced on your driving is sold in two forms that work differently. This guide sets out what the Texas Department of Insurance (TDI) says about each and the questions it suggests asking before you enroll.

The short version. TDI says in How you drive could save you money on car insurance that usage-based and pay-by-the-mile car insurance in Texas could lower your premium cost if you drive safely or don't drive a lot. Pay-by-the-mile policies charge a base amount plus a fee for miles driven, and usage-based policies monitor how you drive. TDI says to compare an estimate to your current policy's cost and coverage.

Here's what we'll cover: how TDI describes each type, the mileage figure TDI gives for judging a pay-by-the-mile policy, what a monitoring program looks at, the privacy questions TDI lists, what TDI has said about ads claiming discounts are required, the discounts TDI describes that don't involve a device, and the other ways TDI lists to lower a premium.

Two products, one name

This guide uses usage-based car insurance in Texas as Credify's umbrella label for two kinds of policy that TDI describes separately; TDI uses the term usage-based only for the kind priced on how you drive. TDI's page How you drive could save you money on car insurance (last updated 10/23/2025) opens with the general case: "Many auto insurance companies offer policies that adjust what you pay based on how much you drive or how well you drive."

Pay-by-the-mile. TDI's description on that page is: "These policies charge you a base amount plus a fee for the number of miles you drive each month." TDI adds that most companies measure the miles through a device attached to your car's computer, and it suggests that owners of an older car without a connection ask the company whether a picture of the odometer can be used instead.

Usage-based. On the same page, TDI says usage-based policies also use a device plugged into the car's computer, or a phone app, to monitor how you drive. It says the insurance company uses that information along with other factors, such as your age, type of car, and driving record, to set your cost.

Read that way, the monitoring information sits alongside the usual rating factors and does not replace them. The two products also differ in what you can know beforehand. If a company tells you its base amount and per-mile fee, you can estimate a pay-by-the-mile bill from your own odometer. A price based on how you drive depends on what the device or app records, which you may not know before you enroll. Our guide on why car insurance is so expensive in Texas covers what else goes into the price.

The mileage question you can answer today

For a pay-by-the-mile policy in Texas, TDI gives a mileage figure to compare your own driving against. Its usage-based insurance page (last updated 10/23/2025) says: "The Federal Highway Administration says the average car is driven 13,476 miles a year, or 1,123 miles each month." Its next sentence says that if you usually drive less than that, a pay-by-the-mile policy might be a good choice.

You can check your own mileage in two ways:

• Take two odometer photos. Photograph your odometer today and again in a month. The difference is your monthly mileage.
• Work backwards. If you know the mileage when you bought the car and roughly when that was, the average since then gives you a monthly figure.

If your monthly mileage is under the 1,123 miles a month that TDI cites, a pay-by-the-mile policy might be a good choice according to that page, so an estimate may be worth getting. The page doesn't say anything about drivers above that figure.

How your miles are spread across the month may matter too. The same TDI page says some companies offer a cap on the number of miles you drive each day so you don't get charged too much for the occasional road trip. Ask whether a policy has a cap and what it is.

According to the same page, pay-by-the-mile policies might be good for people who work from home. A separate TDI page, Ask for discounts to lower your auto insurance premium amount, says under its low-mileage discount heading to let your company know if you work from home or only drive for pleasure. That brings in the discounts that don't involve a device, covered further down.

What a monitoring program is actually watching

A usage-based car insurance policy in Texas monitors more than speed. TDI's usage-based insurance page says of these policies: "They look at where and when you drive, how fast you go, and your braking and acceleration habits, among other things."

Location and time of day are on that list alongside speed, braking and acceleration. The words at the end of TDI's sentence mean the list is not complete, so the full list has to come from the company offering the program.

The page doesn't describe how any one program scores a driver. These are questions you can put to the company, and they are Credify's suggestions, not TDI's:

• What is measured. Ask for the full list of what the device or app records.
• Phone app trips. If the program uses a phone app, ask how it treats trips where you may be a passenger and whether a trip can be excluded.
• The scoring window. Ask how long the monitoring period runs, when the result is applied, and whether the price is set once or re-scored at each renewal.
• Price direction. According to TDI, these policies could lower your premium cost; its page doesn't say whether a program can raise it. Ask the company, and get the answer in writing before you plug anything in.

On judging the offer, TDI writes: "These types of policies could lower your premium cost if you drive safely or don't drive a lot." It then says to be sure to get an estimate and compare it to the cost and coverage of your current policy.

Comparing coverage as well as cost matters because a lower price on a policy with less coverage is not a like-for-like comparison. Our guide on how to compare auto insurance in Texas covers what to line up before comparing two quotes.

The privacy questions TDI tells you to ask

TDI lists privacy questions to ask when considering a pay-by-the-mile or usage-based car insurance policy in Texas. On its usage-based insurance page, under a privacy heading, TDI suggests asking what device your insurer will use to track your driving and what exactly will be monitored, whether you want your company to have information about your driving, whether you are a good driver and think your driving style will help lower your premium cost, and how much you could save.

TDI's last question on that list is: "Could that information be used after an accident?"

TDI's page asks that question and does not answer it, so it is one to put to the company before you enroll.

The question about your own driving is worth an honest answer. A program that monitors speed and braking will record yours, and you are in a good position to guess what it will find.

What TDI says about ads that claim a discount is required

TDI warned Texas drivers on February 11, 2025 about auto insurance ads that hint at required discounts. In its blog post Companies may offer auto insurance discounts. No law requires discounts., TDI says drivers should beware of offers, often on social media, hinting at required discounts based on factors such as your age, your car's age, or driving habits. The post says dozens of Texas consumers have called TDI asking about so-called laws or regulations enabling discounts for the elderly or for driving less, sometimes only if you act quickly.

The post quotes the Insurance Commissioner directly: "Insurance companies may offer discounts, but no state law or rule mandates discounts or puts a time limit on them," said Insurance Commissioner Cassie Brown. The post also quotes her calling such claims misleading.

TDI's post names one risk of responding to such an ad: personal information you provide might be going to a third-party vendor that sells your information to others. The post says you can avoid misinformation by shopping directly with insurance companies or agents, and that you can then ask about available discounts and how you can qualify.

The discounts you may already qualify for without a device

Some of the car insurance discounts TDI describes for Texas drivers don't involve a monitoring device. Its discounts page (last updated 12/11/2025) says companies don't always offer the same discounts, and then lists some common types you might get:

• Good driver discount. The page says you can probably get this discount if you haven't filed an insurance claim and have a good driving record.
• Safe car discount. TDI suggests telling your company if you have anti-theft devices or add them after you buy a policy.
• Multi-car discount. According to the page, if you have more than one car on your policy, you'll probably get a discount, and you also might get a discount for having other policies with the same company, like a home or renters policy. Our guide on bundling home and auto in Texas covers bundling in more detail.
• Low-mileage discount. TDI's advice here is to let your company know if you work from home or only drive for pleasure.
• Good student discount. The page says to let your company know if you have high school or college students who get good grades. See also our guides on teen drivers and new drivers.

A second TDI page, Ways to save money on car insurance (last updated 11/1/2024), suggests asking your car insurance company whether it offers discounts for driving fewer miles, maintaining a good driving record, setting up automatic payments and going paperless, signing up for a driving monitoring program, and certain occupations or group memberships. That page then says: "Your company should sign you up for the discounts you qualify for but ask to make sure they do."

Both TDI pages treat driving less as something to tell your company about, separately from a monitoring program. Whether a particular company offers a low-mileage discount without a device is a question for that company, and a phone call is enough to ask it.

Other ways TDI lists to lower a car insurance premium

TDI's guidance for Texas drivers on saving on car insurance lists signing up for a driving monitoring program as one of several discounts to ask about. The same ways to save page (last updated 11/1/2024) also covers your deductible, your coverages, and shopping around.

Your deductible. According to this page, a deductible is the amount you pay before the insurance company will pay a claim, switching to a higher deductible can lower your insurance premium, and a higher deductible means you'll pay more out-of-pocket if you do have a claim. It suggests thinking about how much you can afford to pay if your car is damaged.

Your coverages. TDI's advice is that if you have collision coverage on an old car that's paid off, make sure the car's value is worth more than what you're paying for that coverage. It also says that if you have gap coverage on your car, you can cancel it when you owe less than your vehicle is worth. Either change alters your coverage, so weigh it against what a loss could cost you. Our guide on what car insurance is required in Texas covers minimum limits.

Shopping around. The page says companies charge different rates. It also suggests calling the TDI Help Line at 800-252-3439 to check a company's complaint record before buying a policy. TDI's discounts page says it's a good idea to shop at least every three years.

These steps appear on the same TDI page as the monitoring program discount, so a usage-based policy is one option to weigh with the others.

What to do with this

These are steps you can take before deciding on a usage-based or pay-by-the-mile car insurance policy in Texas. The order is Credify's suggestion, and the TDI pages behind the facts in each step are linked in the sections above.

• Work out your mileage first. Take two odometer photos a month apart. TDI says a pay-by-the-mile policy might be a good choice if you usually drive less than the 1,123 miles a month it cites from the Federal Highway Administration.
• Ask which product you're being offered. One is priced on how much you drive and the other on how you drive.
• Ask whether the program can raise your price as well as lower it. Get the answer before you enroll.
• Ask TDI's privacy questions. That includes whether the information could be used after an accident.
• Ask how a phone app treats passenger trips. This applies if the program uses an app.
• Get an estimate. Compare it to the cost and coverage of your current policy, as TDI's page says to do.
• Ask about discounts that don't involve a device. TDI's pages mention low-mileage, good driver, multi-car, anti-theft, good student, automatic payments and paperless, and certain occupations or group memberships, and say companies don't always offer the same discounts.
• Treat ads about required or expiring discounts with care. TDI's February 11, 2025 post quotes the Commissioner saying no state law or rule mandates discounts or puts a time limit on them.
• Check a company before you buy. TDI suggests calling its Help Line at 800-252-3439 to check a company's complaint record before buying a policy.

Key facts

• TDI's How you drive could save you money on car insurance says many auto insurance companies offer policies that adjust what you pay based on how much you drive or how well you drive, and that these policies could lower your premium cost if you drive safely or don't drive a lot.
• The same TDI page says pay-by-the-mile policies charge a base amount plus a fee for the miles you drive each month, and that some companies offer a cap on the number of miles you drive each day.
• The same TDI page says usage-based policies look at where and when you drive, how fast you go, and your braking and acceleration habits, among other things, and that the company uses that information along with other factors such as your age, type of car, and driving record.
• TDI's page (last updated 10/23/2025) cites the Federal Highway Administration for an average of 13,476 miles a year, or 1,123 miles each month, and says a pay-by-the-mile policy might be a good choice if you usually drive less than that.
• On the same page, TDI says to get an estimate and compare it to the cost and coverage of your current policy, and lists privacy questions to ask, including whether the information could be used after an accident.
• TDI's blog post of February 11, 2025, Companies may offer auto insurance discounts. No law requires discounts., quotes Insurance Commissioner Cassie Brown saying insurance companies may offer discounts, but no state law or rule mandates discounts or puts a time limit on them.
• TDI's Ask for discounts to lower your auto insurance premium amount says companies don't always offer the same discounts, and under its low-mileage discount heading says to let your company know if you work from home or only drive for pleasure.
• TDI's Ways to save money on car insurance lists a driving monitoring program among the discounts to ask your company about, and says your company should sign you up for the discounts you qualify for but to ask to make sure.

Sources: Texas Department of Insurance, How you drive could save you money on car insurance, Ways to save money on car insurance, Ask for discounts to lower your auto insurance premium amount and Companies may offer auto insurance discounts. No law requires discounts. This page is general information, not legal advice; for a question about your own policy, check the policy or contact the Texas Department of Insurance.

Take the next step

Before you decide on a usage-based or pay-by-the-mile policy, measure your mileage, decide whether you are comfortable with what the program monitors, and get an estimate to set beside your current policy's cost and coverage. Our guides on comparing auto insurance in Texas and getting car insurance quotes cover what to have ready.

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