Pay-per-mile insurance popularity spreads to new states

A popular disruptive auto insurance service is spreading in popularity, with the launch of operations on the East Coast.

Insurance News

By

Metromile, a San Francisco-based insurance company, has officially launched operations in Pennsylvania.

The company, now active in six US states, is the nation’s only pay-per-mile car insurance provider – a service which has been termed “disruptive” by its CEO Dan Preston. The model has the potential to provide huge savings for drivers who usually walk, bike or use public transportation to commute, he said.

"Pennsylvania offers a great market for us because the state offers great transit options," Preston said.

According to the company’s press release, its services are ideal for more than 60% of drivers in Pennsylvania who use their cars to travel fewer than 20 miles a day, and could lead to as much as $500 in savings every year.

The previous owner of Insurance Services United, Jeff Lau - who also has 35 years of experience working in insurance in York County - called the idea interesting, but said that it may not be successful in York.

"Lots of people here are commuting to Harrisburg or Baltimore," Lau said. "It sounds like, in Pennsylvania, they'll get most of their customers in Pittsburgh and Philadelphia."

Rates

Preston said that Metromile follows almost the principles as larger car insurance firms when determining insurance rates. This includes checking the applicant’s driving record and experience along with the make and model of the car.

The biggest difference is that customers are given both a monthly rate – which is generally around 30% of what people currently pay – and a per-mile rate which is usually around 5 cents per mile.

According the Preston, larger insurance companies can’t offer per-mile insurance like Metromile because, in their case, low-mileage customers subsidize high-mileage ones. If companies switched priorities, they will lose high-mileage drivers.

"This is a very disruptive product," Preston said. "We're looking to grow as fast as possible (and) are excited about offering our services to more states on the East Coast."

Changing With the Times

The concept of pay-per-mile insurance has been around since the 1920s, Preston said. In fact, MileMeter, a Dallas-based company founded in 2008, offered a similar product till it closed down in 2012.

But, advancements in technology are helping Metromile succeed.

"A lot of people hesitate because they don't know exactly how many miles they drive per day and if we would actually save them money," he said. "We offer a free device that comes with our app to help them decide."

All customers who download the app are sent the Metromile tag. It uses Bluetooth to connect to the app, and provides various services including helping locate the vehicle in a crowded parking lot and tracking driving statistics.

Customers also get the Metromile Pulse, a device which connects to the car’s diagnostic port and provides all the services of the tag, while also informing users of their car’s overall health.

Metromile was founded in 2011 and first launched in Oregon in 2012. The company is also active in California, Washington, Virginia and Illinois.
 

Keep up with the latest news and events

Join our mailing list, it’s free!