If you’re a vehicle owner, you know how expensive car insurance can be.
Car insurance is mandatory in most states. It protects drivers and can save you a lot of money if you are in an accident.
But for people who don’t get in accidents, it can seem like you are flushing money down the toilet month after month.
Auto insurance can seem especially wasteful when you don’t drive often. With most insurance companies, you are charged the same amount, regardless of how many miles you drive. So a person who drives 20,000 miles in a year would pay the same amount as someone who drives 2,000 miles in a year. Seems strange, doesn’t it?
That’s where Metromile comes in.
We recently heard about this low-cost insurance option for low-mileage drivers, and couldn’t help but dive into extensive research to learn more about Metromile, what it is, and if it’s worth it. And in this post, we’re pulling back the curtain on everything we found.
- What Is Metromile?
- What Is Pay-Per-Mile Insurance?
- How Are Miles Tracked?
- How Does Billing Work?
- Is Metromile a Good Deal?
What Is Metromile?
Metromile is a car insurance company based out of San Francisco. But unlike the established giants in the insurance game, they have a much different business model that’s incredibly beneficial for customers.
Instead of charging drivers a flat rate for insurance every month, Metromile bases your monthly bill on how much you actually drive. The company positions itself as a more affordable option for people who don’t put a ton of miles on their car every year.
Metromile is relatively new compared to many other insurance companies, but they’re making a lot of noise in the industry. They recently completed a $90 million funding round to continue to spread their service; this comes after a $200 million round of funding a few years earlier.
Since the insurance company’s initial start in California, Metromile has expanded eastward across the United States. To-date, residents in Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia, and Washington are able to sign up for Metromile coverage.
One thing that we need to mention before you go any farther: Metromile does not provide coverage for rideshare drivers.
Although the insurance company did have a partnership with Uber at one point in time, Metromile opted to end the partnership. On the top of one of their blog posts about working with Uber, Metromile states:
In order to focus on our personal pay-per-mile insurance offering for low-mileage drivers, Metromile no longer offers rideshare insurance.
Now that we’ve gotten that news out of the way, let’s dig a little deeper and see how Metromile works.
What Is Pay-Per-Mile Insurance?
Even though rideshare drivers are unable to take advantage of the low rates offered by Metromile, here’s what they offer drivers who need insurance for personal use.
The main differentiator for Metromile is their pay-per-mile insurance plan.
This means that your bill changes each month depending on how many miles you drive. If you drive 1,000 in one month, your bill will be higher than months when you drive 200 miles.
This is great for people who are looking for ways to reduce their monthly bill. Want to pay less for car insurance? Drive less!
Needless to say, being able to control how much money you are required to pay for insurance is a fantastic deal.
Pay-per-mile insurance is different from traditional offers because billing amounts can change every month. With a regular insurance plan, you’re locked in for the same rate for an entire year. That means your bill will be the same whether you drive 5,000 miles or 5 miles.
How Are Miles Tracked?
Now let’s get down to the fine details. We mentioned that Metromile charges per mile. Traditionally, this may have been done via an honor system or by taking a picture of the speedometer and sending that in. However, we live in the 21st century, which is why Metromile has a technology-focused method to determine how many miles your vehicle has moved in any given time span.
When drivers sign up for Metromile, the insurance company equips the vehicle in question with a unique GPS device. The tracking equipment is then used to monitor how far a vehicle travels.
The device can even be used in combination with the Metromile app. The app goes beyond mileage tracking — you can also check on your car diagnostics, which is great if you have a pesky “Check Engine Light” glowing on your dashboard. You can also track your parking location and review insights from your previous road trips, like how many miles you covered or your average speed.
One of our favorite features of the mobile app is that it can also warn you if there’s street sweeping in your area. Street sweeping alerts are only available in a couple cities, but we hope it rolls out everywhere soon. Say goodbye to those street sweeping parking tickets!
Clearly, Metromile wants to make sure their app rolls out the red carpet for drivers. With the Metromile Pulse device and the smart driving app tracking you all the time, however, it may be a bit intimidating to sign up for a Metromile insurance plan.
It may feel like they are going to be judging every move you make while you drive. Don’t fret, though. The Metromile app only charges you based on how many miles you cover in a pay period.
If you go over the speed limit or tap the brakes too hard, the app will not charge you more or less. This is entirely different from how traditional insurance companies go about using in-car devices to determine coverage. To help ease the concerns of drivers, Metromile states that “if you hit the gas pedal or slam on the brakes your rates will not be affected. We only measure miles, not behavior.”
How Does Metromile Billing Work?
To recap, Metromile doesn’t punish drivers based on their driving habits. Furthermore, the insurance company determines how much a driver should pay based on the number of miles they drive. In addition to this mileage factor, Metromile charges a base rate for their service.
The monthly base rate means that even if you do not drive your vehicle at all in one month, a bill will still be issued. This base rate is charged on a daily basis too. This means that months with 30 days will have a lower base rate than months with 31 days. This is different than most companies, but it makes a lot of sense. Why should February, which only has 28 days, cost the same as January, which has 31 days?
To determine how much the base rate should be for a driver, Metromile reviews a couple of factors, such as how old the driver is, their credit history, the type of vehicle being covered, and if the driver has ever had any accidents. This is pretty standard for an insurance company.
Bear in mind, collecting this base fee in addition to the per-mile rate makes it possible for the insurance company to cover any damages you may have to pay for in the future. Furthermore, the base rate in most cases is less than what traditional insurance companies charge.
Remember, at the end of each month, drivers using Metromile will automatically be charged a base rate and a per-mile rate, which will vary from one pay period to the next. So the base rate is just one factor that will affect your monthly bill.
To review an in-depth breakdown of the Metromile billing process, you can read more here.
Is Metromile a Good Deal?
There are a bunch of factors drivers need to consider to answer this question. If they offer the coverage you need, and the rate is cheaper than your old insurance, then it’s really a no-brainer: you should switch to Metromile.
Of course, there may be cases where drivers pay about the same but the extra features provided by the Metromile app make them a more ideal insurance company.
The best way to determine whether or not Metromile is a good deal is by comparing your current insurance bill with a quote from Metromile.
When you get your quote from Metromile, you will need an estimate of how many miles you drive monthly.
Once you have your quote from Metromile and an estimate of your monthly mileage, it’s time to do some math. Multiply your daily base rate by 31 (since that is how many days are in the longest months) – this is the maximum amount your base rate will be.
Next, you need to estimate what your monthly mileage cost will be. To do this, multiply the average number of miles you covered in a month by the per-mile rate provided by Metromile. Then add this number to the amount you got when you multiplied the daily base rate by 31. If this is lower than your current monthly insurance cost, odds are Metromile is worth switching over to.
To review how to figure out your personalized answer to whether or not Metromile is a good deal for you, use the formula below.
Current Rate – ((31 * Daily Base Rate) + (Average Number of Miles * Per Mile Rate)) = Potential Metromile Savings
Metromile offers a quick and easy way to figure out if you can save money by using their coverage instead of a traditional company; they estimate that if you drive less than 10,000 miles annually you could save money by switching.
If you drive over 10,000 miles in a year, Metromile probably doesn’t make financial sense. According to the Federal Highway Administration, the average American drives about 13,476 per year, so Metromile is not for the average driver.