Pay-as-you-go Auto Insurance, Oh My
Insurance costs are staggering. Every time the bill arrives, hell, it’s enough to drop a man to his knees. Milemeter – a Dallas-based auto insurance startup – has schemed up an alluring, and noble, solution / concept; providing insurance by a cents-per-mile basis.
Minimum coverage starts off at five cents a mile and can be purchased in increments as small as 1,000 miles and as large as 6,000 miles. And, due to policy, must be renewed every six months. So, say you drive 5,000 miles a year, you’d pay $250 for a year’s worth of minimum coverage. Once your odometer has crossed the pre-paid threshold, your coverage has expired.
(Learn more about Milemeter after the jump)
According to Milemeter’s blog site, transforming insurance from a fixed cost to an incremental cost will provide a financial incentive for drivers to drive less.
“By driving less, we reduce the incremental vehicle operation costs borne by society. In practical terms this means less taxation for road maintenance and construction, less transportation congestion, less demand for parking lots, fewer traffic injuries, and fewer tailpipe emissions (NOx and VOCs).
Comments
Iain
Yes, this makes sense. I have three cars and put few miles on each. So paying the traditional way is expensive on a per mile basis. It will be interesting to see if they can get funding....the insurance lobby is powerful and the traditional issuers cannot be happy about this...
Matteo
Makes me wonder how exactly they are going to enforce it. Will they require some black box GPS system to make sure that every mile is correctly counted? Will incidents of odometer rollback rise?
Rex
I'm with Matteo.
How will they enforce the mileage. The honor system could be fine in 1950 but not 2008.
Chris
Dustin -- thank you for the generous blog posting.
Matteo -- we don't use tracking devices (GPS, etc) of any kind. In the insurance business, one always encounters fraud, but we have planned for it accordingly.
Our goal is to create an insurance product that gives choice and control to the consumer, allows consumers to reduce insurance expenditures, and has environmental and social policy benefits.
Thank you for your interest.
Sincerely,
Chris Gay
CEO, MileMeter
Oollyoumn
It may work if it is a good value. A cursory look at these numbers doesn't impress me. I have a van that I drive very little, so I ensure it as a pleasure vehicle with 5,000 miles per year. I pay about $350/yr, but for full coverage, PL 300k/500k, PD 100k, Comp $300 ded, Coll $500 ded, and towing. As I understand this release, basic coverage would be $250/yr. I would say I am getting more than $100 worth of extra coverage.
I have a daily driver that I drive about 12k/yr, same coverage except but no coll, it comes to 300/yr. The per mile coverage would be $600/yr with much less coverage.
I'm all for innovation in insurance, but without a clear value advantage it will be a hard sell.
Eric
I drive more than 20K miles per year so I'll stick with what I have. But I have some friends who drive less than 5K who might be interested if they can get eaqual coverage for less money. What I really want is a la carte cable!
Dave C
A very intriguing concept. If this coverage is ever available in Massachusetts (fat chance, I know) I'd give it serious consideration. We have a number of cars that are driven less than 2500 miles per year, yet we have to pay for mandatory insurance as if they were driven daily.
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Michael Erlich
I believe that the key factors as far as Pay as You Go systems are length of time and time of the day. We developed a system that does just that. The device is not connected to the vehicle systems and does not infringe on the user's privacy like GPS based systems. The device is attached to the vehicle like "Easy Pass". The device is smart enough to detect dismantling after the original installation.
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