Since I don't drive much, I like the idea of auto insurance that's usage based. This is known as pay-by-the-mile or pay-as-you-drive auto insurance. Incentives to drive less is not only good for our wallets, but also good for the environment.
Recent news of a partnership between OnStar and GMAC Insurance sparked my interest to research what options are available. Here are three programs that I've found.
Low Mileage Discount Program is the new GMAC Insurance program for OnStar customers. The program confirms your mileage based on your vehicle diagnostics reports. An example discount provided by the site is 39% for those who drive 5,000 miles or less per year.
MyRate Program is an auto insurance program developed by Progressive Insurance. Instead of OnStar it uses an on-board telematic device that plugs into a car's OnBoard Diagnostic port. The device wirelessly sends data about when, how much and how you drive your car to help determine your rate at renewal. The program is currently only available in Alabama, Kentucky, Louisiana, Michigan, Minnesota, Maryland, New Jersey and Oregon.
MileMeter is a new auto insurance company that is based on pay-by-the-mile insurance. Unlike the other two, MileMeter does not use a mileage tracking device. Instead it's based on what you report. In addition, they receive odometer readings from vehicle emission, maintenance, and registration databases. The policy costs are quoted in cents per mile. You may purchase between 1,000 and 6,000 miles of coverage for a 6-month period and pay in full at the time of purchase. You may purchase more miles as you need them. They currently only provide insurance policies in Texas
As someone who lives in Austin and doesn't have OnStar, MileMeter was my only option. So I tried MileMeter's online quote service. One thing I liked about the quote process is that they don't ask for your social security number since they don't use credit scoring.
One negative is that they didn't provide many coverage options. I wasn't able to match the coverages that I currently have with State Farm. I selected the maximum liability coverage, collision/comprehensive with a $500 deductible and Uninsured/Underinsured coverage. They gave me a quote of 8.74 cents per mile for a 6-month term. This comes out to $87 for 1,000 miles to $524 for 6,000 miles. I think I could get by with 3,000 miles which results in a policy cost of $262 for a 6-month term which is less than what I'm currently paying for my State Farm policy. However, as I mentioned, the limits are different so it's not a perfect comparison.
I hope we'll see more auto insurance companies offering these pay-by-the-mile plans. State Farm does offer low mileage discounts, but the maximum discount is only 18%. I want pay-by-the-mile plans with discounts proportional to the miles I drive.