Why should someone who only drives 10,000 miles per year pay the same amount for car insurance as someone who drives 25,000?
They shouldn't, says Steve Pretre, CEO and founder of the Redwood City-based tech company MetroMile.
MetroMile is setting out to correct that injustice, by offering the country's first car insurance that charges its customers by the number of miles they actually drive, each year.
MetroMile customers are given a small device called a Metronome to put in their car, which collects accurate data about the number of miles driven and transmits it in real-time to MetroMile. The customers pay a small annual base rate plus a few cents per mile driven, which can yield significant savings, especially for customers who drive 10,000 miles or less per year.
"Only the number of miles driven is used to calculate the rate - not when, where or how someone drives," said Pretre. "By paying only for the miles they actually drive each month, lower-mileage drivers can save 20 to 50 percent for protection equal or superior to traditional car insurance products."
The customers can also access the data extracted from their Metronome online, to help them learn more about their car usage and driving habits.
Pretre believes Metromile's unique services can also serve to reward environmentally-conscious commuters for their "green" habits.
"There is a widening gap between high-mileage and low-mileage drivers," said Pretre. "Millions of people are making conscious decisions to bike, walk and use public transit more often, benefiting the environment and livability of our cities. Traditional car insurance pricing takes the money those people should be saving based on their reduced driving and uses it to subsidize people that drive more."
"That is unfair - and we are setting out to change it," he added.
In a statement this week, MetroMile representatives said that, according to a 2008 study by the Brookings Institute, U.S. consumers spend $178 billion per year on car insurance - and, based on those numbers, 67 percent of drivers would save money with a per-mile insurance pricing approach like the one being introduced by MetroMile.
MetroMile launched publicly on Dec. 5 and began offering their new pay-by-the-mile car insurance in Oregon. The company is working fast to obtain regulatary approval to expand and offer their services in more states, such as California.
According to the Redwood City company's statement of last week, MetroMile has already raised $4 million in funding.
For more information on MetroMile's services, visit www.metromile.com.
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