How much do you actually drive every month? Do you have a lengthy commute to work each day? Or do you work from home or take public transit?
If you have your own car, but aren’t a frequent driver, pay-per-mile car insurance could help you save hundreds of dollars each year.
The Federal Highway Administration says an average driver puts in 13,476 miles per year but according to TechCrunch, 70% of drivers cover fewer than 10,000 miles per year. Why not pay just for the miles you drive?
That’s the idea behind Metromile, a car insurance company that charges people only for the driving they actually do each month. “If you’re driving under 5,000 miles per year, you will save 40% to 50%,” the company’s CEO, Dan Preston, told TechCrunch.
Is “Pay-Per-Mile” Insurance New?
While many insurance companies offer low-mileage discounts, Metromile is the only company offering “pay-per-mile” insurance. Another company, MileMeter, offered a similar pay-per-mile model, but closed its doors in 2012.
However, other companies offer programs that may help reduce your rates in exchange for monitoring your mileage and driving patterns. Progressive’s Snapshot and Allstate’s Drive Wise both allow you to install a device in your car that tracks your mileage and driving habits, including braking patterns and driving aggressiveness, to help determine your rates.
A Great Deal for Urban Drivers
Metromile is aimed mostly at urban drivers who have a car but don’t use it all that often. With parking fees, tolls and traffic, many city dwellers’ cars stay parked far more often than they’re driven. This service only charges you for the miles you drive, not for the days your car sits in your driveway, garage or parking space, unused.
Right now, the service is only available in California, Oregon, Washington, Virginia and Illinois. However, the company hopes to expand to other markets in the near future.
How Much Does It Cost?
You install a device in your car’s on-board diagnostic port to log your mileage, and this number, along with your age, vehicle, credit report, where you live, insurance history and your driving record, helps the company determine your rates.
Each month, you pay a fixed base rate as well as a per-mile rate. Most people will pay a different amount each month, but the base rate and per-mile rate should stay the same for six months unless you request a reevaluation.
NerdWallet wrote that one 29-year-old San Francisco woman would pay around $57 per month with Metromile, as opposed to $121 through Geico (which was the cheapest traditional auto insurance provider they could find).
What’s the Catch?
If you’re a low-mileage driver, there really isn’t a catch. The company offers full coverage options and four different levels of liability coverage. Your car can be registered in any state, but the car must “reside permanently” at the location you list on your policy.
You can get Metromile if you own or lease your car, and it doesn’t matter if the car is paid in full or financed. If you don’t drive at all in a month, you’ll still pay the base rate for that month, but you won’t pay any “per-mileage” charges.
Do Road Trips Count?
Your per-day mileage charges are capped at 150 miles (250 miles in Washington state). That means if you head out on a long road trip, you’ll pay the 150 (or 250) miles for that day, but then you can drive for hundreds more miles on that calendar day without accruing any additional charges.
Uber Is Hopping on the Bandwagon
Even Uber is hopping on the pay-per-mile game, as Metromile contracts with the company to let drivers in some states pay per mile. Uber drivers can use Metromile to distinguish which miles they’re driving for Uber versus the miles they’re driving on their own time.
This helps fill the gaps and answer questions about how insurance works when a driver is, say, dropping off a passenger. Metromile and Uber can sync together to establish when Uber is footing the bill for insurance (any time a passenger is in the car) versus when the passenger leaves the car and the driver is on their own, insurance-wise. This is optional for Uber drivers, though, and they don’t have to use Metromile.
Can I Test It Out?
If you’re intrigued by the pay-per-mile concept but not sure if it’s right for you or if you drive few enough miles per month for it to make sense, you can test it out. Use Metromile’s free beta program to track your miles, see how much you drive and help you determine if pay-per-mile insurance is right for you.
Your Turn: Have you tried per-mile insurance? How much did it help you save?
Kristen Pope is a freelance writer and editor in Jackson Hole, Wyoming.