Growing popularity of pay by mile auto insurance


02Chris Gay had launched MileMeter in 2008 as the only company in the country that offers auto insurance based on how much the individual drives. This was done through a vehicle tracking device. Although this company has license to offer auto insurance only in Texas, it is about to expand into other states with new options as well. The concept of auto insurance based on mileage hasn’t caught up very speedily, although it has been around for a while. But the situation is now about to change with as many as 10 auto insurance companies starting to test these pay as you drive policies over the last couple of years. Auto insurance companies like GMAC, American Family and Progressive are in fact, offering these types of policies in 35 different states.

According to recent reports, about 2/3rds or slightly more than 66% of the households in the country would save in excess of 250 dollars by paying auto insurance premiums based on the mileage they use. Customers of MileMeter pay for up to 6000 miles in advance and can go for even more online, when required. Customers have to furnish information including vehicle type, home address, age and odometer readings.

Pay as you drive insurance basically comes from the concept that those who driver very less and hence use less mileage signify lesser risk for the auto insurance companies. This means they should be paying relatively less in terms of the premium they pay every month. The current interest is largely because of the development in the technology which is more advanced to monitor and analyze the data that has been captured. In fact, insurance based on mileage is going to be a big thing in the auto industry according to some people. This is because, mileage based insurance will take us a step closer towards identifying the level of risk a driver represents based on the amount he drives annually. That way, those who drive less will gain benefits and wouldn’t be charged as much as they are now. About 25% of the customers at Progressive usually sign up for this option. Progressive also offers other prices based on the time of the day at which the driving happens and the general driving behaviour which is provided by a device that will be installed under the steering column of the car. Funding and state regulations meanwhile represent the biggest obstacles for MileMeter’s expansion.