Technology Makes the “Anti-Insurance” Insurance Company Possible

Chris Gay has nicknamed his business the “anti-insurance insurance company”. The former software engineer, working with the idea that drivers should only pay for auto insurance based on the miles they actually drive, developed and founded Web-based MileMeter in 2008. Today, MileMeter is posting a profit, expanding and extending its popularity.

How MileMeter Works

MileMeter is tailored to customers who drive 12,000 miles or less each year, appealing to those who drive a little but pay a lot for insurance, like drivers who most often use public transportation, have low-mileage second cars, are older drivers or are in college. It just doesn’t make sense for people who only drive a little to pay for policies geared towards every day drivers. Pay as you go insurance lets you pay a share of premium the fits your level of risk more proportionately, rather than letting the lower-risk drivers supplement premiums for higher-risk drivers. This simple fact is that the more you drive, the more likely you are to have an accident. If you drive less, you should pay less.

Customers who want MileMeter’s pay-as-you-drive coverage supply online information that includes age, location, vehicle model and a snapshot of the auto’s odometer miles with a driver’s license. No driving record or credit history is required. MileMeter offers pre-paid, 6-month policies for 1,000 to 6,000 miles and the value of any unused miles can be rolled over into a policy renewal.

MileMeter Saves Drivers Money

MileMeter claims some of its thousands of customers save between 40% and 70% when switching from traditional car insurance. The non-profit Brookings Institution agrees that drivers can pocket hundreds of dollars per year, since under current standard auto insurance, all drivers grouped in the same driving demographic pay the same premiums no matter how often they really drive.

Brookings also proposes that pay-as-you-drive car insurance like MileMeter’s would serve as an incentive for drivers to make fewer unnecessary trips. It estimates a national driving decline of 8% with $30 billion in extra benefits like fewer traffic jams and accidents along with environmental and energy savings, if pay-by-mile insurance becomes commonplace.

Pay as You Go Works in Europe

Drivers in Europe are already enjoying the fuel efficiency, environmental and monetary savings that pay as you drive insurance offers. As the movement to match a driver’s level of risk more closely with premium costs, we are likely to find unsafe drivers paying the highest share of insurance costs. This should reduce accident rates overall as drivers cut back on trips and spend less time at risk on the roads.

Jessica Bosari writes about insurance and automotive topics for Jessica believes that informed consumers get better auto insurance discounts because they make better choices when comparing insurance companies.