There’s a new game in town when it comes to auto insurance. It’s called pay-per-mile and it just might save you money on your car insurance. Before you jump on board, here are some basics about what it is, who offers it and if you can really save money.
What is Pay-Per-Mile Auto Insurance?
Pay-per-mile is a form of usage-based car insurance. While some insurance companies use your driving habits as a means of determining your rate, pay-per-mile looks strictly at your mileage. So, how much you pay is determined by how much you actually drive. If you don’t drive a lot, you might not pay a lot. The first thing you may notice here is that pay-per-mile may not be for everyone. But, for low mileage drivers, the idea is that if you are not in the car you are less likely to have an accident of file a claim.
The programs are designed for drivers who drive under 10,000 miles per year. And if you’re used to your regular monthly premium, know that you’ll have to get used to a car insurance bill that fluctuates based on how much you drive in a month.
Who Offers Pay-Per-Mile Insurance?
The bigger player right now in the pay-per-mile market is Metromile. Metromile currently offers pay-per-mile insurance in California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia, and Washington. But, they are expanding, so if you are interested keep a watch out for new states. Metromile charges a monthly base rate, plus a per mile rate. Your actual rate is calculated using a wireless GPS device that tracks your mileage.
Allstate also started offering a pay-per-mile program in the State of Oregon, through Esurance. However, other players have been slow to come to this market.
The Pros and Cons of Pay-Per-Mile Insurance
If you are low mileage driver, pay-per-mile car insurance just may be the disruptor to the car insurance market you’ve been waiting for.
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