Incremental Coverage: Auto Insurance by the Mile
January 14th, 2008 by Megan Mahan
A U.S.-based insurer finally brought Norwich Union’s incremental insurance idea back across the pond.
This summer, MileMeter will launch their pay-as-you-go auto insurance policies, charging drivers for coverage based on how often, when and where they use their cars. Unlike its British predecessor, however, MileMeter won’t install any kind of tracking device inside the insured’s car.
Here’s how it works:
- Drivers will pre-pay for coverage, in increments of 1,000 miles
- The cost per mile is determined by the geographic area and the age of the driver
- When the odometer reaches the end of the pre-paid increment, the coverage expires
A reasonable estimate for a 30-year old driver with minimum coverage in an urban ZIP code would be about 4 cents a mile, figures MileMeter CEO Chris Gay. Multiple drivers can also be added to the policy.
Dallas-based MileMeter will roll out policies to the state of Texas this summer, and follow it up soon after with a broader U.S. expansion. In the meantime, it’s garnered some pretty impressive buzz:
[I]t was one of only seven finalists in the most recent Amazon Web Services Startup Challenge. Because it doesn’t use gender as a basis for determining rates, MileMeter has been ardently supported by the National Organization for Women (NOW).
It also got a mention on Springwise, a global entrepreneurial blog (which is where I heard about it).
Rewarding people for not driving their cars (by slashing premiums by as much as 30%) could have a pretty favorable impact on the environment, as well as crowded highways and interstates. I can also see these policies appealing to city-bound folks who walk or take public transport more than they drive.
Would you consider adding pay-as-you-go auto insurance policies to your offerings? What potential risks or problems do you see with this kind of policy? Do those problems outweigh the convenience to drivers?
More MileMeter: The MileMeter Blog
