Newsflash: tech disruptors are shaking up the status quo. Silicon Valley startups have no qualms about breaking with tradition, and no industry is safe from a full-scale reboot.
Now auto insurance is in the crosshairs. San Francisco-based Metromile is on a mission to reimagine the whole experience of owning a car. For public transit regulars and ride-sharing millennials alike, that could be a really good thing.
Auto insurance recap
Before talking Metromile, let’s review the basics. Auto insurance aims to protect drivers from financial turmoil after a car wreck. Typically, insurance holders pay a fixed monthly premium in exchange for coverage. If you get into an accident, you can file a claim documenting the incident. Then your insurance company will pay for vehicle damage and possibly related medical costs, depending on the type of coverage you’ve chosen.
A handful of lucky drivers never have to file a claim — they’re simply paying for peace of mind. But for people with a less-than-perfect driving history, it’s a different story.
Insurance rates are based on estimated risk. People who have a history of reckless driving, DUI charges or luxury cars are considered “risky” investments because it could cost the insurance company more to insure them than they would pay in premiums. On the other hand, people with clean driving records and good financial records are considered less of a risk. They may be offered competitive rates or cash rewards as a signup incentive.
Brand new views
In recent years, some companies have added a new metric for determining risk: daily mileage. After all, the less you’re on the road, the less likely it is that you’ll get in a wreck. These pay-per-mile plans don’t just benefit insurance companies, though. If you’re a city slicker with access to the subway or a car you hardly use, you can save big.
Enter Metromile, industry disruptor
Since its inception in 2014, Metromile has emerged as an industry leader in pay-per-mile insurance. Although Metromile is the only company that specializes exclusively in pay-per-mile coverage, the concept isn’t entirely new. Big-name brands like Esurance and Progressive also offer low-mileage discounts and pay-as-you-drive telematics programs.
How does Metromile work?
Essentially, the less you drive, the less you pay. Metromile uses a telematics device called the Metromile Pulse to keep track of how many miles you drive each day. Simply stick the Pulse in your car’s onboard diagnostics (OBD-II) port and the it will automatically collect data to determine how much you’ll owe at the end of the month
Here’s where the savings come in. There are two parts to Metromile’s pricing model. First, you pay a low monthly base rate based on the types of metrics that traditional insurance companies use — age, vehicle model, driving record, etc. Then, you pay a few cents for each mile you drive. Don’t worry, road trippers: you won’t be charged for more than 150 miles per day.
There’s an app for that, too
Pricing isn’t all that sets Metromile apart. In true Silicon Valley style, the company has developed a way to simplify the experience of owning a car. The Pulse device powers Metromile’s mobile app, which helps you make data-driven decisions about travel routes, car maintenance, traffic trends and more.
Here are a few ways the Metromile app makes driving easier:
- Uses GPS technology to remind you where you parked.
- Collects trip data over time to optimize your commute.
- Displays your car’s diagnostics data to help you understand what “check engine” is really trying say.
- Sends street sweeping alerts in select cities.
Chalk one up for tech
Ready to rip up your old insurance contract? Shift down for a second. While the pay-per-mile pricing model is appealing, it works best for drivers who rack up less than 200 miles per week. And you’ll need to makes sure Metromile is available in your state before you make any moves. Whether or not you switch providers, Metromile’s success is a major win for consumers — and a signal that tech innovations will continue to solve for problems we never knew we had.