Markets in Everything: Pay-By-The Mile Insurance
A first-of-its-kind plan is MileMeter, available only in Texas, which last year began offering six-month policies with chunks of insured miles ranging from 1,000 to 6,000 miles. When the "tank" runs dry, motorists buy more.
"We absolutely anticipate coming to California," said Chris Gay, MileMeter founder and chief executive officer. "Our take is that half the market out there is being overcharged and underserved – and that's who we aim to address."
HT: Economics 101
12 Comments:
"In 16 states, Progressive offers pay-as-you-drive policies that track mileage as well as driving habits, such as the hour and the speed that a vehicle is driven."
I have this plan in Minnesota. Why shouldn't somebody who drives farther, or faster, or stops more suddenly be charged accordingly?
I'll be getting a 18% discount off the regular rate when I re-up in 4 months.
Assuming I keep my lead food under control that is.
Hmmm, interesting idea and consider the following: MileMeter, a licensed auto insurance carrier based in Dallas, joined with Texas National Organization for Women (NOW), the Environmental Defense Fund (EDF) and other environmental and urban interest groups to announce that Texas is now one of the first places in the world where drivers can buy auto insurance by-the-mile...
The MileMeter FAQ makes for some interesting reading...
Could this program be driving the
price of regular auto insurance down?
I prefer "pay at the pump" and all claims go before a tight-fisted board, with powers of biding arbitration, that caps all payouts.
Ripping off auto insurance is a national cottage industry practised in all 50 states.
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Charging less for auto insurance to drivers who drive fewer miles or drive safer than other drivers is like charging healthy people less for health insurance than unhealthy or obese people.
This is discriminatory at best - hate at worst.
Why do these insurance companies hate fast drivers? Why do they insist on discriminating against people who drive fast?
This idea has actually been pretty big among Transportation Engineers and Planners for about 4 years now. Glad to see it finally arrive.
This “Auto Insurance Pricing Theory” was put forth in the 1980’s.
The major problem is this: no incentive to drive your vehicle well.
Incentives might, maybe, just possibly, are important in Economics.
This sounds like a great idea for those with four sports cars sitting most of the time in the garage. This may save Jay Leno a lot of money (not that he needs to pinch pennys)
W.E.H.
Insurance companies already factor in a price for both vehicle and driver risk now.
Underwriters and actuaries can factor in a fee based upon risk of vehicle exposure(miles driving) plus risk of driver (age, gender and driving record). Not fimiliar with this little start-up but I'll bet this is how they will build their pricing model.
Heasley,
With Progressive, there is an incentive to drive your care more safely - along two parameters at least. I have a doohickey that plugs into my diagnostic port & it phones home to report 1) how fast I've been driving and 2) how many times I've done a "hard brake."
This has encouraged me to drive a little bit slower, and look further ahead to minimize emergency braking. It makes driving slightly less fun, but I'm a cheap bastard, so it all works out in the end.
Don't like the idea of the insurance companies riding with me via a little black box. Combine it with gps and I can see your rates going up for rolling through a stop sign at a deserted intersection. Others may welcome Big Brother into the car. It is not for me.
I welcome this type of insurance and am surprised it wasn't offered years ago.
Emily from MileMeter here.
While we only offer pay-as-you-drive in Texas, we are collecting interest from other states. If we get enough interest from your state, there's a much better chance we will make it out there! See http://www.milemeter.com/your_state.
Also, as an fyi, we do not use tracking devices. We don't like the idea of Big Brother either. :) We just require a photo of your odometer.
Thanks for the mention!
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