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Milemeter: Buy Your Insurance By the Mile
Milemeter is a Dallas-based startup that will let you buy American car insurance by the mile. CEO Chris Gay and I had a call last week so that I could learn how his company has taken such a different approach to the auto-insurance market. You can buy insurance in increments as small as 1000 miles and as large as 6000 miles. There is no bulk discount everything is charged by the mile. The cost per mile is dependent on geography, drivers age, vehicle and coverage level; the examples I saw (with minimal coverage levels) were under 5 cents a mile. The miles expire after 6 months (this is necessary for the re-insurers; they hope to get rid of the expiration in time). So if you don't drive your car much you can insure it for the cost of 2000 miles a year (which at 5 cents a mile is 100 dollars). Milemeter does not require any sort of tracking system. They get an odometer reading from you when you sign-up. Your insurance card will expire when you hit a certain mileage. Milemeter will also be able to get odometer readings from mechanic's systems. The base cost per mile is determined by three factors: geography, drivers age and the vehicle. This is somewhat controversial. They do not require a credit check. Milemeter is one of the only insurance companies to not factor sex into their pricing. This alone has earned them support from NOW in the recent AWS startup contest -- women typically get higher rates than men. Milemeter's approach assumes that it really just comes down to how many miles a person drives. To learn more check out NOW's site on this issue. As you may have guessed, they are built on AWS (you can see a video discussing their usage on their blog). They are also using Ruby on Rails with Postgres. Milemeter will be launching May 1. They are working on funding right now. This is what I want to see, large, black-box industries being taken down and made consumer-friendly. (Can the health system please be next?) I don't really know what I pay for with my current insurance, but with Milemeter I'll have a much better understanding. After the jump I've included some screenshots of the purchase process.
On the previous page you provided your VIN (works for any car made after 1981), odometer reading, your date of birth, and number of household drivers. Only minimal insurance coverage will be ready at launch.
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Comments: 30
Casey Margell [18 December 2007 02:15 AM]
This is a great idea. Really REALLY great. And I totally agree about consumer-friendly companies taking on the huge and overly bloated "alternatives" we currently have in a number of industries.
Now if only someone would do something about health insurance. I might have to write up a business plan for this.
Michael H [18 December 2007 04:29 AM]
Maybe we'll really see a la carte cable one of these days.
Tom Clancy [18 December 2007 04:52 AM]
What stops me from over-reporting my current odometer reading?
wytten [18 December 2007 05:03 AM]
A word conspicuously absent here is "claims". I wouldn't want to be an early adopter of this.
Matt Webb [18 December 2007 05:35 AM]
cf:
Norwich Union are pretty big in the UK and launched 'Pay as you Drive': http://www.norwichunion.com/pay-as-you-drive/
It requires installing a GPS+tracking device in your car, but the service design around that technology is pretty interesting: you can subscribe to satnav/speed camera warnings, and there's an assistance button built-in.
Another difference: Norwich Union charge more if you drive at night.
NU is more complex than Milemeter and not suitable for short-term insurance. I suspect getting rid of the complex billing infrastructure (physical and computational) saves enough cash+complexity that MM have the better business, just like flat-rate internet beats figuring out variable call charges.
Doug [18 December 2007 06:03 AM]
Tom - I'm the Chief Technologist at Milemeter.
The odometer is considered a legal device. The insurance covers your vehicle between stated odometer reading at time of purchase and miles purchased. Long story short, if an individual over-reports mileage, that individual is driving around uninsured.
Our goal is to make buying car insurance simple, accessible and non-invasive. Using the odometer will keep most people honest and allow us to focus on our customers and our business.
Josh Spaulding [18 December 2007 06:04 AM]
It's something I'd definitely want to wait out to see how it pans out. I don't think I'd risk it right away, but it sounds like a pretty creative and possibly helpful system.
Chris Gay [18 December 2007 07:07 AM]
Wytten,
We work with a well-established and respected claims service and management company. We also are required, as a matter of law, to maintain adequate capital reserves to cover claims.
-Chris (from the MileMeter video)
Allison [18 December 2007 07:52 AM]
So if the coverage is based on mileage, what if multiple people drive the same car? For example, my sister and I are both away at college, but when we come home both of us drive the same car (which generally isn't otherwise driven). Thus if we were both to use MileMeter, would we have to pay twice as much (since there's no way to determine which miles were driven by whom)?
Also, I don't know how feasible this is, but maybe in the future you could also have a way to insure one car for multiple drivers (maybe make the application form list all the people/ages that would drive the car?). That way, for a situation like mine (and I'm sure I'm not the only one out there with this situation who would want to use your service!) people who rarely drive but end up driving the same car could still get insurance through you.
Chris Gay [18 December 2007 08:02 AM]
Allison,
You can associate multiple household drivers with a single vehicle, so even if you and your sister both drive the vehicle you will not be paying twice for each mile driven. We've already designed the product to accommodate situations like yours (and ours), and hope to have it available for purchase soon. Thanks for the interest and questions!
-Chris
Doug Bryant [18 December 2007 08:15 AM]
Allison - During the signup process you can name multiple drivers for a vehicle. Additional premium will be incurred, but it will not be double.
The number of miles driven by one driver or the other does not matter. All named drivers will be covered.
Doug
Chris Conley [18 December 2007 10:55 AM]
this looks great, quickly doing some back of the envelope calculations and i'm paying roughly 10 cents/mile.
5 cents/mile would be huge!
Allison [18 December 2007 01:04 PM]
Thanks for your responses Chris and Doug... definitely looks like something I could use once it comes out!
Tiffany [20 December 2007 12:09 AM]
Very interesting. I looked at how much I've driven in the past year, and I think I would have saved a lot using paid per mile. I don't drive that much.
Bill Good [20 December 2007 03:03 AM]
Congratulations, Chris! You and MileMeter. have come a long way.
Michelle [28 December 2007 06:28 PM]
If you can insure multiple people on a couple cars then you are golden! I live in SF and I know tons of folks who would love to share a couple vehicles if they could do it legally. Around here you drive as little as possible since parking is so annoying. So a lot of people have given up owning cars but would still like to borrow one to go to the grocery store or across the Bay in the evening since public transit is scarce at night.
Can MileMeter insure carless individuals? Some of the car share companies have really weak insurance coverage so it is wise to have some of your own coverage.
John [ 9 January 2008 10:23 AM]
Let's see: People get their oil changed every 3,000 miles and even get a little sticker placed in the upper left hand corner reminding them to get their oil change. That being said, I don't know one person who gets their oil change on mile 3,000. Everyone goes over the 3,000 mile notice and what's not to say that everyone will go over on the mileage they buy.
What this product is going to do is create a situation where you have a bunch of uninsured drivers on the road. I don't want to be caught driving in TX when this product gets rolled out because I'll end up getting hit by someone who went over on their mileage usage with Milemeter.
Shawn [ 9 January 2008 10:40 AM]
What about people with bad driving records? It doesn't sound like milemeter charges more for them. That will eventually cause their rates to rise for everyone.
Julf Helsingius [14 January 2008 07:23 AM]
Would you cover foreign drivers visiting the US with their cars?
jim [25 January 2008 08:32 PM]
Most people barely check their odometer on a regular basis, let alone remember to have their insurance id card. Imagine what you'd tell the police if they pull you over. It is one big headache waiting to happen. What if you drive more miles than you usually do and you're not covered and you cause a fatal accident. Not a good idea, all because your insurance ran out because you ran out of miles? People should be very scared about their liability should they make a small forgetful mistake. At least with a traditional 6 month or year policy you know that time is covered regardless of mileage.
Craig Gaitan [ 2 February 2008 04:21 AM]
The idea sounds great, but do finances to provide
strong reserves for claims?
Brad Hulse [ 2 February 2008 05:50 AM]
I've always liked the idea of insurance by the mile and have tracked it. My wife and I are accident and ticket free, own our cars, carry 100/300, UM/UIM, $1000 deductibles and drive less than the national average (12K) per vehicle. We drive ~21K total annual mileage. Our Insurance Cost per mile ~$0.03. Possibly, I'm interpreting the cost structure of your info page poorly but for equal coverages this would cost .0546 +.054 = $0.1086 per mile. 360% more.
Interestingly the cost ratio between what I pay to insure my cars and what it costs me to insure against others who do not have appropriate coverage (UIM, UI) i.e. law breakers, versus what MileMeter charges is nearly the same! This suggests to me that >1/2 the accidents involve at fault UIM or UI drivers (ask your insurance agent if the company will pay to repair the UM who flees the scene of the accident) OR is this option is universally overpriced?
A good idea for a business would be to somehow identify and reduce the UIM/UM threat!, thereby reduce to halve the price of vehicle insurance. It is doubling OUR cost per mile driven!!
Stephen Schmidt [ 2 February 2008 06:19 AM]
OnStar automatically reports your mileage each month when it checks out your car. OnStar tells you if you need to change oil or perform other maintanance. You even get a report of the tire pressure for each tire, all e-mailed to you. In theory, you could have OnStar relay the mileage to MileMeter also, or you could just manually forward the OnStar report each month. MileMeter sounds like a great idea for us retired types who drive very little.
Doug Bryant [14 October 2008 06:42 AM]
We have officially launched! http://milemeter.com
Tawni [15 October 2008 04:44 PM]
Will you cover motorcycles?
Christine [29 October 2008 05:54 PM]
the only thing is like cell phones, you purchase my the minutes you use, but what happens if you run over, can you still be covered. I personally on my have enjoyed the unlimited minutes because I do not have to worry about a $400 bill because my minutes ran out. If you drive more than normal one year and your mile run out what is next.
CLAUDE FRANKLIN [ 6 November 2008 04:49 AM]
THE INFORMATION ABOUT CAR INSURANCE IS GREAT BUT THERE IS NO WAY TO CONTACT THESE PEOPLE AND GET CAR INSURANCE.I DRIVE TO WORK EVERY DAY 3 MILES ROUND TRIP AND I WOULD LIKE TO AQUIRE A INSURANCE POLICY LIKE THIS ONE. HOW DO I CONTACT MULEMETER??
CLAUDE FRANKLIN
Allyson H [28 April 2010 12:04 AM]
Thanks for the information and this is really one of the great ideas I have ever heard of. Defiantly this will really help to know many things as you specified like vehicle and coverage level and this is really important and when you don’t use you car to drive or use often for driving then this will be the best way to save money on insurance. I think this has to be done as soon as possible. The tracking system is also best for those who drive often and at car insurance temporary you can find the whole information about the policy - pay as you go car insurance and its benefits. http://carinsurancetemporary.co.uk/
william [ 7 July 2011 08:57 AM]
It no longer a good deal as of July 7 2011 you have to buy 4k miles or above which puts you in the same price range as unlimited plans.
Nick [ 5 September 2011 10:04 AM]
Really good idea. Any word on whether this has been successful or not? I have not yet heard of it in my area.