Oregon is now home to the first auto insurance company that charges users by the mile. MetroMile, based in Redwood City, California, started offering auto insurance policies earlier this week in Oregon and hopes to expand to other states in the coming months.
How does it work?
Instead of charging a flat rate each month, there is a base rate, then a fee per mile. As with any insurance policy, the rate varies based on your age, driving history, and the type of car you drive.
Monthly mileage is measured through a device, called a Metronome, that plugs into a car’s diagnostic port and records mileage and other trip data.
Users can view this data online to keep track of their driving habits, including average speed, travel time, and even a map showing where the car has been. If you’re worried about privacy, you can turn off the GPS data collection, and MetroMile ensured it will not provide this data to third parties.
Statistically, people who drive more miles tend to have more auto accident injury and property damage claims. Traditional insurance companies charge similar rates for similar drivers: low mileage drivers actually subsidize those who drive more. MetroMile seeks to reward those who drive less.
MetroMile hopes to inspire individuals to drive less through its pricing structure. The theory is that a per-mile cost will make people more conscious of the miles they drive, thereby reducing driving by 8%. Even a 1% decrease in driving nationwide would reduce CO2 emissions by 15M tons per year.
A similar company, MileMeter, was started in Texas back in 2008, but ceased operations in 2012, citing competition from big insurance and the financial crisis. MetroMile hopes to find success by targeting cities with more pedestrians and cyclists, starting with Portland and possibly expanding to San Francisco soon.
Is this insurance is right for you?
Unlike most car insurance companies, MetroMile has a very easy-to-use calculator on its website that estimates your insurance rate.
While it isn't necessarily the best choice for all drivers, the company estimates it will save drivers 20-50% if they drive under 10,000 miles per year. A typical policy costs between $30 and $60 per month and then a few cents per mile driven.