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.
