Chris Gay has cleverly branded his business as the “anti-insurance insurance company.” Formerly a software engineer, he came up with an idea for motorists to pay for their insurance based on their recorded mileage. He launched MileMeter, an online platform, in 2008. Today, MileMeter is profitable and its popularity is steadily growing.
### How MileMeter Works
MileMeter is designed for people who drive 12,000 miles or less each year. It’s especially useful for those who don’t drive much but still pay a lot for insurance. This includes commuters who use public transit, owners of rarely-used secondary vehicles, elderly drivers, and college students. It doesn’t make sense for these occasional drivers to buy the same policies as frequent drivers. Instead, the ‘pay as you go’ model lets drivers pay a premium that’s in line with their actual risk level, rather than subsidizing premiums for riskier drivers. The basic idea is straightforward: the more you drive, the higher your risk of accidents. If you drive less, you should pay less.
To use MileMeter’s pay-per-mile coverage, clients need to provide basic information like their age, location, car model, and a photo of their car’s odometer. They also need a driver’s license, all of which can be done online. The company doesn’t require driving records or credit histories. Customers can buy prepaid six-month coverages ranging from 1,000 to 6,000 miles, and any unused miles can be carried forward to their next policy period.
### Financial Advantages of MileMeter
MileMeter claims that many of its clients save 40% to 70% when they switch from traditional car insurance. The Brookings Institution, a non-profit organization, backs this up, observing that drivers could save hundreds of dollars each year with this model. Typically, drivers with similar demographics pay the same premiums regardless of how much they actually drive.
The Brookings Institution also suggests that pay-per-mile insurance could encourage people to limit unnecessary trips. They estimate that this could lead to an 8% reduction in driving nationwide, translating to savings exceeding $30 billion from reduced traffic congestion, fewer accidents, and environmental and energy benefits.
### Success of ‘Pay as You Go’ in Europe
European drivers are already seeing the financial, environmental, and fuel efficiency benefits of pay-per-mile insurance. As industry trends shift towards matching premiums with actual risk levels, riskier drivers will likely face higher insurance costs. This could lead to fewer accidents as drivers limit their trips and spend less time on the road.
Jessica Bosari, who writes for CarInsuranceQuotesComparison.com, often covers topics related to insurance and vehicles. She believes that well-informed consumers can secure better auto insurance discounts by making informed choices when comparing insurance providers.