Blog » pay-per-mile insurance

We recently shared a brief history of how Metromile became the pioneer of pay-per-mile car insurance — there’s more to that story. While we spearheaded the idea of plugging a device into your car to measure mileage, many other insurance companies are using a similar model to offer car insurance discounts, but monitoring driving behavior as well. The term “usage-based insurance” is becoming increasingly popular, so it’s important to understand that not all usage-based programs are the same. Let’s dive in and explore the things to consider when choosing the right usage-based insurance for your needs.

There are many factors that can affect your car insurance premium, such as driving history, the model of your car or your geographic location. That’s because typically, these are indicators that can predict how likely an accident might be. Many insurance companies have deemed driving behavior to be one of the most important indicators since a driver who frequently slams the breaks is likely at a higher risk to be involved in an accident. That’s why insurance companies offer safe driving programs, where they reward good driving behavior with insurance discounts. The trade in? Your driving behavior will be monitored, and the occasional mistake could affect your premium. The way insurers measure safety varies, but some of the most common factors include the time of day, average speed, sudden acceleration and hard braking.

Here at Metromile, we only measure mileage and not behavior. We believe that risk is determined primarily by the amount of time you are in the car. If you aren’t behind the wheel, you aren’t going to be in a car accident! That’s why with pay-per-mile car insurance, the amount you pay is based on the miles you drive. Because we base your monthly bill on exact mileage, we typically save low-mileage drivers (under 200 miles per week) a lot of money compared to the discounts offered by other usage-based programs. On average, our customers are saving $500 a year!

So what’s the best usage-based program for you? It depends on your driving style and how much you drive. According to The Zebra, most usage-based insurance programs offer about 10-15% discounts. If you don’t drive much, you could see much more significant savings (like over $500!) with Metromile’s pay-per-mile car insurance offering. Find out how much you could save by getting a quote with Metromile!

Here at Metromile, we pride ourselves on being pioneers of the pay-per-mile car insurance model, providing a fair and affordable insurance for low-mileage drivers. Technically, we weren’t the first to introduce this idea, but we were (and still are!) the leaders in making it seamless, scalable and easy for everyone. We were founded exactly five years ago, and now have customers in seven states, from California to New Jersey (with many more coming soon). In celebration of our 5th birthday, let’s take a step back and explore how we got to where we are today.

One of the first times the per-mile insurance concept was introduced was in a report by William Vickrey in 1968, and later in a  report by the Brookings Institution in 2008. They hypothesized that if people paid for insurance by the mile, they would be incentivized to drive less since their bill would be based on mileage. The less someone drives, the less they would pay. To prove out the Brooking’s Institution’s theory, we recently ran a study with the Jackson Institute for Global Affairs at Yale University and found that our customers are already driving 6% less after switching to Metromile. This seemingly small number can actually have a significant impact on our economy and environment, especially if everyone reduced their driving by this amount. The benefits to per-mile insurance are clear, but the major insurance companies have been wary to use this model since low-mileage drivers (65% of the US, to be exact) are subsidizing the small handful of people that drive the most.

There have been a few smaller companies that ventured to test a per-mile insurance model, but they required setup that wasn’t exactly user-friendly. One company required a mechanic to install a mysterious black box in the car, and another relied on consumer-submitted photos taken of the odometer reading. None of them made for a hassle-free experience, which is necessary for the person that only occasionally uses their car.

That’s where Metromile comes in. We knew there was a need for a more fair car insurance, but the solution couldn’t involve complicated setups or time-consuming reports. Technology would be an important factor to measure miles driven, and it needed to be plug-and-play. Your mechanic already uses your on-board diagnostics port (OBD) to obtain car health data, so why not use the same port to gather mileage data? We had a solution, and the catalyst was that the sensors we needed to do this become inexpensive and reliable. So in 2011, we introduced a simple way for low-mileage drivers to save money with pay-per-mile car insurance. Just plug a device (we call it the Pulse) into the OBD-port of your car, and it will automatically track mileage. On average, we are saving our customers $500 a year, so we are pretty confident in our solution.

So where are we off to next? There are a lot of exciting stops on our roadmap, from state launches to helpful new app features. If you are currently a Metromile customer, we could not have gotten here without you, so we thank you all for your support. And if you aren’t currently a customer and don’t drive much, you can learn more about our innovative pay-per-mile insurance offering here!

If you’ve toyed with the idea of biking to work, now is the time to take off those (hypothetical) training wheels. Today, cities across the US are celebrating Bike to Work Day, an occasion that illuminates the benefits of biking to work. Even one day per week of biking to work can have a significant impact in reducing your carbon footprint. Did you know a 4-mile bike commute keeps 15lbs of pollution out of the air?

Here at Metromile, we joined in the fun by sprinkling bike seat covers across San Francisco and hosting a refreshment station outside of our office to refuel and reward bikers joining the cause. Per usual, our swag wheel was a hit!

Although the name might suggest the contrary, Bike to Work Day isn’t just about biking on one single day. The ultimate purpose of the event is to show the community just how easy and sustainable it is to bike to work. Many of the cities participating in Bike to Work Day already have dedicated bike lanes, and chances are your office has some sort of bike parking available. If you are a Metromile per-mile insurance customer, biking to work can also save you money because the less you drive, the more you save. And if you aren’t a customer, now is the time to make the switch!

Metromile app users in Los Angeles spend an average of six hours per week in their cars. And a new study from TomTom finds that coincidentally (or not coincidentally) LA is the most congested city in the US and the 10th most congested city in the world. So what does that mean for your commute? And more importantly, what can we do to reduce all of this congestion?

LA has a 40% increase in overall travel time compared to what TomTom classifies as “free flow”, which means driving without any congestion. Other major west coast cities are up there too: SF at 34%, Seattle at 31% and Portland at 26%. All of these cities have more traffic on local roads versus highways. Interestingly, all of these cities also have about a 15-25% increase from morning peak hours to night peak hours. Portland has a 35% increase in travel time in the morning but jumps up to a 61% increase in the evening. Meaning, your morning commute might not be that bad, but be prepared for some evening gridlock.

So what is the takeaway from all of this data? Do whatever you can to drive less. Nearly all of these cities have great public transit systems, and many are focusing on making their roads more bike friendly. A national Bike to Work Week (which happens to be next week!) is also helping to raise awareness. And if you do need a car to get to work, try to avoid commuting during peak evening hours.

Here at Metromile, we believe that pay-per-mile insurance incentivizes people to drive less, therefore removing cars from the road. While we are currently seeing that our LA app users spend six hours per week in their cars, our per-mile insurance customers are averaging four and a half hours. If you only get charged for the miles you drive, there’s more reason to find alternative transportation methods, like biking or taking the train. Fewer cars on the road results in less traffic, which means less commuting time for people that do have to drive!

Want to see how much you could save with per-mile insurance? Learn more here!