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Drive Less, Save on Insurance

A Dallas-based company is offering Texans auto insurance by the mile.

MileMeter, which is targeting people who drive fewer than 12,000 miles a year, is the only company offering mileage-based insurance in Texas despite a law passed in 2001 that encourages such a plan.

MileMeter charges from 3 to 20 cents per mile, depending on coverage options chosen, and it takes the driver’s word on the odometer reading.  The policies are for six months, whether or not the driver has reached the mileage limit.

Practical Tip

You should be aware that often, if your medical bills were paid by health insurance of an employer’s health plan, the insurance company or plan may want you to reimburse it out of any personal injury recovery. Your “insurance” turns out to be not insurance at all, but a “loan.”

Andrew Traub

The company can offer low rates for low-mileage drivers because “it’s very difficult to get into an accident when your car is parked,” said MileMeter chief executive Chris Gay.  “The less you drive, the less risk you’re exposed to.”

Federal statistics put the average number of miles driven in 2006 at 14,768, but many Americans have driven less this year because of higher gas prices.  According to Gay, roughly half the population drives around 12,000 miles a year.

Progressive is planning to introduce a mileage-based plan in 2009 which uses GPS technology to track usage.

The problem, though, is that MileMeter’s limits top out at $50,000 per person and $100,00 per accident which is not nearly enough.  Also, the insurance automatically ends when the odometer has registered the number of miles purchased or six months have elapsed, whichever comes sooner.

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