Pay-per-mile insurance encourages drivers to reduce the number of miles they drive. Doing so also reduces congestion, air pollution, and crashes but greatly affects the freedom that comes with driving.
The leading company in pay-per-mile is the San Francisco-based company, Metromile. Metromile was started in 2011 and is currently only available in eight states including Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia and Washington.
Just like traditional auto insurance, rates are based on a driver’s age, car model, driving history, location, marital status, etc. However, Metromile’s unconventional approach to affordable car insurance also takes into account the number of miles driven by a policyholder.
Metromile uses the Metromile Pulse, a free wireless device that plugs into a car’s OBD-II port. Once it is in place, it counts the miles driven to determine a total monthly bill. Older cars do not qualify for pay-per-mile insurance through Metromile because they lack the technology needed for Pulse.
The name for this data collection is telematics. Using telematics, Metromile can charge a premium based on usage how many miles a policyholder drives. The less miles people drive, the less money they pay. Aside from a multi-car discount, Metromile does not offer any additional ways to earn discounts other than reducing the amount of miles driven.
Policyholders at Metromile pay a base rate and an additional rate based on miles, usually only a few pennies per mile. This means monthly payments are always changing, making it impossible to create a good budget. Unless you drive sporadically, companies like Metromile will not benefit you. On average, only drivers who travel 10,000 miles or less a year benefit from pay-per-mile insurance.
According to the National Association of Insurance Commissioners, Metromile had more than the median number of complaints to state regulators for a company its size in 2017. Common customer complaints were rates increasing every six months, even when the policyholder did not file any claims.
Rideshare drivers will also not qualify for Metromile, unless they drive for Uber and only in California, Illinois and Washington. Metromile will not count the miles driven while policyholders are driving for Uber since they are covered under Uber’s insurance policy during these miles. Metromile does not have a program for Lyft or Sidecar drivers.
People must also decide how comfortable they are being monitored every time they step into their car. The Metromile Pulse has a built in GPS system that can collect location information while it is being used. This may not be the type of information customers want to share with a company since it is a big invasion of privacy.
If you feel like you are paying too much for your vehicle insurance coverage, an agent can help you determine if you qualify for any auto insurance discounts.