For years, people who don’t drive very often felt slighted by insurance companies, feeling as though they’re being charged too much. Those days are over, as pay-per-mile car insurance is growing across the country. This innovative form of car insurance allows its customers to pay based on the amount of miles they drive. Customers are already saving hundreds of dollars on pay-per-mile policies.
Do you think you fit the bill? Pay-per-mile insurance can save you a lot of cash, but if you aren’t careful, it can cost you more than you could’ve expected. If you feel that your car hasn’t been getting many miles for the last few months, you should decide if switching to this policy is the smartest move for you.
What Is It?
Pay-per-mile car insurance is a relatively new form of auto insurance pricing that allows customers to pay based on how much they drive. Some insurers that offer this plan believe that the amount someone drives is a determining factor in how likely he or she is to get into a car accident; in other words, the more you drive, the higher risk you might be deemed.
How Does It Work?
In order to accurately get charged for the amount of miles you’re driving, your insurance company will install a wireless device into your car. Not only does this piece of technology measure how many miles you’re driving, it can also measure how safely you’re driving.
What Companies Offer It?
Metromile is an insurance company that is leading the charge in the pay-per-mile car insurance initiative. Drivers pay a low monthly base rate in addition to a few cents per mile they drive. The bill at the end of each month is the sum of the base rate and the per-mile rate a customer drives. With Metromile, drivers with a low monthly mileage save an average of $500 annually. This policy is currently only available in California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia and Washington, but Metromile plans on expanding this policy soon.
Esurance offers a pay-per-mile plan for its customers in Oregon at this current moment. Esurance sends its pay-per-mile customers a device that monitors their mileage. Esurance’s monthly costs are similar to those of Metromile, with a base cost and a per-mile rate. Esurance only recommends joining this policy if you drive less than 10,000 miles annually; otherwise, you probably won’t see a difference in your savings.
Who Is the Ideal Pay-Per-Mile Insurance Customer?
Understandably, the customers who get the best rates with a pay-per-mile policy are the ones that don’t drive as much. If your car is parked more often than the average car, you will save quite a bit of money with this policy.
Drivers with a short commute: Since every mile only costs a few cents, people who aren’t travelling very far on a daily basis will make out well with this policy. For customers that only drive a few miles down the road to get to work, this deal is worth it.
Fair-weather drivers: The national average annual miles per driver is 13,476 miles. If you feel you drive far less than this amount, you might want to switch to pay-per-mile car insurance.
People who rely heavily on public transportation: Again, the less you drive, the more likely you are to save money with this policy. If you take the bus or train on a day-to-day basis, you’re probably not driving too much. This is especially prevalent with car-owners living in a heavily populated city.
When It’s Not Worth It
While pay-per-mile insurance is the most economical policy for some people, it can actually cost others more in the long run. If you have a long commute or travel long distances often with your car, you’ll be paying more money with a pay-per-mile policy than with a traditional coverage plan.
To avoid losing money, when deciding whether or not you want to switch to a pay-per-mile policy or not, don’t underestimate the amount of miles you drive on average. The best way to figure out if this is the smartest option for you is to track the amount of miles you drive in a month-long period of time. Check out some pay-per-mile quotes to see if switching to this policy will save you as much as it has saved other customers.