port and then records mileage and other trip data.
(Photos © J. Maus/BikePortland)
MetroMile, which launched in Oregon today, is the first company in the nation to offer pay-per-mile auto insurance. The company is targeting its services at the growing number of Americans — particularly those under 40 — who are driving less.
While company CEO Steve Pretre hails from Redwood City, California, he and his partners have decided to base the company here in Portland.
Why Portland?
“What brought us here was here initially was the bike community,” Pretre shared when I met with him last week. During one of his many visits over the past several months he went on a run and got caught at a bridge lift on the Hawthorne Bridge. “While I was waiting there, there were probably close to 100 bikes waiting with me to get across. I realized right then that this was the right place for us to start.”
MetroMile is based on the fact that many city dwellers — especially in low-car meccas like Portland — don’t actually use their cars all that much. In fact, recent numbers from ODOT show that in 2011 the amount of miles driven by Oregon residents dipped to its lowest level since 1997. Since insurance companies base their monthly rates on averages, many policy holders end up subsidizing the driving habits of others.
“There is a widening gap between high mileage and low mileage drivers,” says Pretre. “Millions of people are making conscious decisions to bike, walk and use public transit more often… Traditional car insurance pricing takes the money those people should be saving based on their reduced driving and uses it to subsidize people that drive more. That is unfair and we are setting out to change it.”
Pretre says his goal with MetroMile is to figure out, “How do we encourage or reward that driving less behavior? And make sure that when people are making those tradeoffs, they are getting fully rewarded for it, instead of just being asked to subsidize someone who is driving more?”
A typical MetroMile policy runs about $30-40 per month and then customers are charged a few cents per mile once they hit a certain limit. MetroMile is targeted at people who drive less than 10,000 miles per year (the national average is 13-15,000). The company estimates people will save about 20-50 percent on average.
MetroMile is all about data. One of Pretre’s partners in this venture (which is funded in part by $4 million from venture capital firms) is an ex-Google employee that started a crop insurance company that crunches weather data to forecast climate trends.
Data analysis is key to the MetroMile business model and mission. When you sign up, you get a device that plugs into your car’s diagnostic port. The data is then fed into your online profile (which looks similar to Strava, a popular bike trip tracking app). Mileage, trip length, distance, and so on are all displayed in easy-to-read graphics.
The idea is that making people more aware of the type of trips they’re taking, and allowing them to compare trip data to others, will be a powerful way to influence behavior. And for Pretre, he hopes it encourages people to drive less. “We’re actually encouraging a behavior we think is really good and people should be rewarded for making those kinds of choices.”
For those concerned about privacy, Pretre says people can easily turn off the GPS data collection.
And why would a company that sells auto insurance actually want to discourage driving? “If we are going to talk the talk, we have to be willing to walk the walk,” Pretre says.
Whether or not this takes off remains to be seen. But it seems like it could be a potentially powerful force in changing behavior and getting people to think more about how often they drive and what type of trips they take — both of which could help curtail car overuse and ultimately encourage more bike trips.
MetroMile plans to eventually expand the service to more low-car cities.
What do you think? Is this something you’d be interested in?
— Note: I’m proud to announce that MetroMile will be the presenting sponsor of our Ride Along series. Stay tuned for the next installment coming later this week.
UPDATE: For more details, see the comment below just written by CEO Steve Pretre.
Thanks for reading.
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Very Interesting.
I, like many people in Portland, own a car and ride a bike. My car however is typically reserved for longer trips. Weekend geteaways to Seattle, trips out to the Gorge, etc. etc. If I had to guess I would say I probably put about 6,000 miles a year on it.
One of my incentives for biking is already economic. I work downtown and don’t like to pay for parking. That alone would cost me $200/month if used my car to get to work. I don’t particularly like paying for gas either. If I had an economic incentive on the insurance side to drive less that would be even more of a bonus.
This month I have two trips up to Seattle planned which is unusual for me. I think I will reset the odometer on the car when I get home and figure out exactly how many miles I drive this month as it will be unusually high and I can use that money to see if something like this would save me money.
From their FAQ – “Any miles you drive above 150 in a single day, per vehicle, will not be billed.”
https://www.metromile.com/faqs
Yup – if you only take a few long trips a month, you only pay for the first 150 miles. Andrew will definitely save money using MetroMile.
Hi Andrew,
MetroMile will very likely save you money if you only drive 6,000 miles a year. Even if you drive 7-9K miles/year, MetroMile is likely to save you money. Your thinking seems to align with the company’s ethos; we want to reflect the true cost of driving in every marginal mile driven. It’s a more fair way to distribute the costs of car insurance. Bikers have been most of our 1st customers!
Great idea!
Oops, wait, there’s that privacy thing and the fact that Allstate owns a patent on this idea- Progressive is about to pay out a huge chunk of cash to Allstate for putting out devices exactly like this.
My privacy is worth one heck of a lot more than $10 a month.
MetroMile does not infringe on AllState’s patents, and our product is significantly different than Progressive’s SnapShot. They put a device in your car, track your driving habits, then come up with a rate to offer you. We actually charge you by the mile, and the upfront quote we give you of the cost per mile won’t change within that 6-month period.
You can also turn off any GPS tracking with a simple click of the button as a user. We will only track the number of miles driven, to charge you correctly.
this idea makes too much sense…
but I only pay about $18 a month for my motor vehicle insurance so this doesn’t help me… also, my motor vehicle doesn’t have a diagnostic port and isn’t a car…
And I just bought insurance too!!! I commute via bike each day but I’m not sure about the car-free plunge just yet, this would be perfect for my 2500 miles a year. Re-run this story in 6 months? Pretty Please?
You can cancel a policy and get a pro rated refund anytime. Might annoy someone, but you can do it.
I have Progressive and insure and un-insure my 2nd car, a pickup truck, as I need to use it. They haven’t complained once.
You won’t need to do that with us! You can sign up and only pay for the miles you drive, so your car can sit idle and you won’t pay for any miles!
True, but don’t you charge a base per-month fee on top of the miles driven?
What company did you sign up with? You may be able to find a way out if you just signed up, most companies will let you cancel the policy within a certain window.
You can also look into what the termination fee is, and if the savings you will get from MetroMile are big enough, it could still justify the switch!
Call us or email us and we can help you through the process.
I already pay $30 a month from Geico for my mid 80’s compact pickup which looks to rack up about 4k this year. No port to plug into either. This insurance needs to be 20 bucks a month for me to really be attractive and I hope they roll out the uber low mileage plan.
I plan on getting a quote to see where it comes out. However, price alone is not the most important factor when choosing insurance. You also want to know that the company will pay out when making a claim, and I’m a bit wary about an insurance company startup. $4M in funding is not a lot of money, I don’t see them on stable financial ground by any means.
The concept is definitely pretty good, though. I’d like to see it catch on.
Insurance companies are usually insured by other insurance companies… IMNAIA, but I don’t think they need to have a huge nest egg ready for payouts.
From their FAQ
“Dallas National Insurance Company underwrites the policies, which means they provide the financial backing to secure your policy and meet the requirements of the State of Oregon. Dallas National has been a licensed Insurance Company in the state of Oregon for over 17 years.”
Scott, as others have pointed out, we are backed with significant capital that will pay out claims. Do not fear!
I urge you to check out our quoting platform on our website, and if you have any questions, you can call or email us. You should save money if you drive less than 10K miles/year.
No. This is part of a negative trend in the insurance industry that wants to decrease its own risk by tracking our lives at a more and more granular level. these sensors can track where you go, when, your speed, acceleration and deceleration. new sensors are being put into cars to measure your heart rate, blood pressure, perspiration, etc.
the industry plan is to get infrequent drivers in for the discount, however, the key is that this first group is going to select for people who are above–average drivers. this then leaves the rest or the pool as higher risk, at which point they can raise insurance rates, and then offer a discount for installing the sensor. iterate several more times until the only people without the sensor are bad drivers and privacy freaks and you can now require the sensor to be installed as a condition for getting insured.
don’t take my word for it, the business strategy has been documented in a white paper by IBM “Using business intelligence and optimization to secure the future in the global Insurance market” [1]. a much more reader friendly overview can be found at naked capitalism [2]:
i’m not questioning the intentions MetroMile, specifically here. maybe they are the good guys and only have good intentions, i don’t know, but i’m willing to give them the benefit of the doubt. even so, this is still part of the surveillance state buy in problem.
[1] ftp://ftp.software.ibm.com/software/solutions/soa/pdfs/BI_and_Optimization_for_Insurance.pdf
[2] Read more at http://www.nakedcapitalism.com/2012/11/the-expanding-surveillance-society-getting-you-to-buy-into-being-monitored.html#8S4ZuQT25KMBXHXl.99
completely agree. It’s just additional surveillance.
So what? It’s not like you’re not already tracked by your cell phone and the fact you’re entering a comment on this blog. Actually if you own a newer car it’s probably already connected into the ‘net to watch for service reminders.
You’re right though – it’s the data that’s more valuable to these guys than the insurance premiums. In this day and age it shouldn’t come as a surprise though. I kinda like when I hit a web page and also catch the latest specials on competitivecyclist.com. Heck of a lot better than watching TV and seeing nothing but car ads!
In terms of the surveillance state, good luck stopping that momentum – it was around long before those papers were written and that term was coined.
at the cost of 30,000 lives each year I’d be ok with them requiring a camera in each motor-vehicle on the road…
You’re concerned about the surveillance state, and yet you consistently use the most watched, most traceable, least private form of ground transportation?
You do know that you’re giving up your right to anonymity from the police by getting behind the wheel of a car? And that, despite ChoicePoint’s ability to predict your pregnancies better than you can, the DMV is still the most complete source of personal information in the country, if not the world?
Cars are dangerous, expensive, and so necessarily highly regulated. Do not blame the insurance companies for exposing the inherent complexity of driving as explicit risk-management strategies. They’re just the messenger.
If you’re really concerned about being surveilled, opt out of high-risk/high-cost activities like driving. Don’t get a driver’s license, and push your state rep to implement a photo ID that serves as proof of age only and does not provide any personal data (on the card or in the database). If you drive, you’ve already picked your point on the privacy/convenience spectrum; getting angry at the follow-on consequences of that choice makes no sense.
Peter, with MetroMile, you can turn off GPS tracking with the click of a button as a user. We won’t track your location after that, at all.
Are they properly licensed in Oregon? They do not appear on the insurance commissioner’s website, but maybe its not up to date yet.
Also, I did a quick price quote. With an estimated 400 miles per month (all weekend trips) it was 15% more than my current insurance (but I already get low mileage, loyalty, no accidents or tickets discounts).
Also, they base their base rate on your credit score (I got one quote with “excellent” credit and one with “fair” and the base rate differential was $25 more for someone with a worse credit history). I guess that’s industry standard, but it really shouldn’t be considering they are providing you with a monthly, paid service, not financing anything.
Also, from what I can gather, its not purely pay per mile. They establish a base rate and then its something like $0.07 per mile after that.
Babygorilla,
Yes, we are properly licensed in Oregon.
MetroMile does not charge you for more than 150 miles in a single day. If you drive mostly on weekends, then you will likely still save money by switching. Do the math on miles/year or miles/month excluding anything above 150 that you would take on a trip. What are your savings now?
I did get a little excited when I saw this, but quickly got disappointed when I realized my car is two years too old for it and it would cost me more than my current rate.
Blaaaa…not a deal. I pay about 20 bucks a month on an 85 Chevy pick up that I drive very very little. 30-40 then the price goes up from there depending on how much you drive?? I’m trying to figure out where the benefit is…
Well yeah, it’s not for (nearly) 30 year-old cars with zero book value. It’s for newer cars where people may be paying over $100/mo for insurance.
Mike,
Check your liability and collision/comprehensive coverage that you currently have. We build that in to the price we first show you, if you play around with that it could lower your rate.
Perfect. Mrs Dibbly & I drive maybe 1,000 miles per year. Let’s get a quote…
For our very low mileage 2001 vehicle, good driving records, very good credit, $500 deductible, $100k/$300k limits, it looks like $29.14 per month plus 2.4 cents per mile. That’s less than $400 per year based on 1000 miles per year. ($1000 deductible drops it to $28.21 per month and the per-mile rate stays the same. Drop the collision coverage & it goes down to $27.59 per month & 2.0 cents per mile.) I’ll have to dig out our current policy to see how that compares.
That was with “Excellent” credit. With “Very Good” it jumps to $37.20 per month & 3.2 cents per mile. ($1000 deductible, $100k/$300k limits) That’s a pretty big jump!!
That is a big jump and begs the following questions: Where does very good end and excellent begin? 700? Also- based on which report?
Timely, I just pulled my info with Experian last night.
So this is only where one credit company stands, but their scores have the lowest credit risk level between a score of 726 – 830.
What does credit rating have to do with safe driving habits? I can’t stand the use of credit rating to determine eligibility for things that don’t relate to credit–such as insurance rates(???) and job offers (for jobs that aren’t in financial industries).
Credit rating is one of the allowed factors in determining car insurance rates. It’s not perfect, but it’s only one factor.
“Allowed”, yes, but how relevant is it? Shouldn’t driving record be the real determining factor for rate quotes? Are insurers worried that customers will crash their cars or fail to pay premiums? What “credit” is an insurer extending to its customers? To me, this makes as much sense as using academic transcripts to determine health insurance rates.
Are monthly cell phone bills “allowed” as a criteria to determine auto insurance rates? That seems to be more relevant than credit score.
Nothing personal, this is just one aspect of “The Industry” that seems discriminatory and aimed at allowing arbitrary rate inflation.
El Biciclero,
Statistics is a powerful tool and credit score is one thing that is highly correlated with risk factors and can predict losses. It isn’t supposed to be discriminatory but is supposed to accurately place people into different risk pools based on their profiles. It just so happens that lower credit correlates with a much higher risk of loss.
Part of what we are trying to provide, and reward, is more efficiency in driving. We want to be very precise AND fair; just like we don’t want low mileage drivers subsidizing high mileage drivers, we do not want higher risk individuals being subsidized by lower risk individuals. That’s how insurance should work.
I understand your concern but we can’t deny the strong statistical significance and correlation when building a mathematical model. It isn’t fair to us, consumers, or the philosophy of efficiency we’re pushing.
The credit score isn’t being used in terms of “how likely is this person to pay the bill” but is predictive and associated with higher risk.
Dwaine,
Did you go all the way through the process? If you enter your information, we can give you a Final Quote with your real credit, etc. built in. The jump from Very Good to Excellent is a guide, but to get a real number you’ll need to enter your information.
I hope you’ll try it, because if you drive 1,000 miles a year, you are subsidizing other drivers and are very, very likely to save with MetroMile!
Paranoia aside, I will definitely check this out. I was excited to call my insurance company and tell them I only use my car on the weekends when I moved to Portland a few months ago. No change in my cost. I went from 100 miles a month to 10-20 and they offered no discount.
Not sure this really meets a need. Ever since I moved to Portland (about a year ago) I’ve been toying with the idea of selling my car to avoid the $1K a year I spend on insuring a car I hardly ever use. There’s a Zipcar pod 3 blocks from my home for when I really need a car. This would save me some money, but not enough to make me hang onto my car.
Side note: I don’t have a bicycle. A walkable neighborhood and good bus service is what drives down my driving. Though Trimet going bankrupt might change that.
Caveat Emptor, and umm, nice try. I plugged in my info @ their site, but with my current AAA rates and same coverage levels I currently have for my 2000 Subaru Outback (paid for), I would be able to drive 3,300 miles per year with these guys before the rates equal each other.
Do the math and let’s get these guys to lower their rates; they need to succeed here since we’re their “Launch City” – otherwise “El Fail-o”. Plus, AAA doesn’t track me and is known the world wide. ~ Great Idea business dude, make it worth our time.
Thanks Jonathan for the heads up!
C3,
Did you try going all the way through the quote process? After a credit check you could see a drop in the rate that we are quoting. I’d urge you to try!
$40 a month is a “savings’? I paid just shy by like $10, that’s for full coverage on my 92 GTI after age 25, a fairly high rate car… just normal insurance. Why not charge nothing, then charge for the actual driving? Maybe a $5 month minimum if the car is not driven at all. Right now I have storage as it sits many moons often (at least if it burned or was broken into I am covered), it is $35 every 6 months!
The risk associated with fire, theft, etc. is too high to not charge a base rate or only $5/month.
I hope you give MetroMile a shot!
I like the idea, theoretically. I’m a safe driver, and I’ve got nothing to hide, but the privacy is still a concern. I’m envisioning a scenario where I’m in an accident but not at fault. The at-fault driver’s insurance subpoenas my GPS data, sees that I was driving 10mph over the limit, and uses that to put the fault for the accident back on me.
I do, however, wish that I could get a discount for driving less! Even better, a discount for spending less time driving. That would encourage me to bike more in the city. The by mileage discount doesn’t really discourage short city drives, but rather it discourages long weekend trips. I love weekend trips!
Note the part where you can turn off GPS data collection. I’ve read that other insurance companies who are offering use-based coverage are making a point of not even including a GPS in their devices.
They don’t need GPS, the network connection technology can locate you, just like your cell phone already does (though not with the same accuracy).
the tool doesn’t monitor speed. only miles.
Aaron,
In the FAQs, you’ll see that MetroMile doesn’t charge you for more than 150 miles/day. Long trips won’t penalize you.
Also, you can turn off the GPS tracking with the simple click of a button as a user.
First, thank you Jonathan for letting people know about MetroMile. We have been so welcomed by the community especially at BikeCraft last weekend. We’re looking forward to supporting the low car lifestyle in Portland. Just wanted to provide quick answers to some of the questions that have come up.
– The insurance program is approved by the State of Oregon. We developed the product and are responsible for all of the services to our customers. To provide financial security to our customers, we have partnered with a larger company that has been licensed in OR for over 17 years and writes about $400M a year in premium for various types of insurance.
– We are not taking the approach that the other insurance companies referenced have taken. Our pricing is not based on where, when or how people drive. It’s simply the number of miles driven times a set rate per mile, plus a low base rate (because some things do happen when the car isn’t being driven). We do capture GPS data to map trips so people can look for patterns to lower their driving, but you can turn that service off at any time if you want.
– For those of you thinking about the occasional road trip, we cap charges at 150 miles per day specifically to give people that freedom.
Again, thank you for welcoming us to Portland. Don’t hesitate to contact us if you have specific questions at metromile.com
– Steve
Steve, I’d say your base rate is competitive, but definitely not low. When I price a plan equivalent to my current GEICO plan, the savings is not that great. I can save a little more money by lowering my liability levels, because you’re more flexible that way than GEICO, but that’s nothing to do with the amount I drive.
If I still have a car a year from now, it’s not unlikely I’ll be getting my insurance from you. But with decent mass transit and three, count them, three car sharing companies, there are options for my not owning a car at all. In Portland, that would seem to be your competition.
Seems like many people maybe didn’t make it to the end: “people can easily turn off the GPS data collection.”
Privacy, schmivacy. Unless you have cookies turned off on your browser, the business world knows more about you than your significant other.
However, as Aaron said, I really keep my car around to get out of town; camping, and the 1-2x / year trip to visit friends throughout the Southwest or other parts further flung. And therefore, my average mileage ticks along at 0-10 miles / week, with the occasional 3k mile trip in a couple weeks. At that rate, my average remains above the breakeven point, even thought the city of Portland hardly ever sees me behind the wheel. (This also makes me a drastic net positive for “paying my share” of the local and regional road system since I also own a home and pay in to the road maintenance system.)
Nate,
I’d suggest getting a quick quote on our website to see if you can save. With a great record, you may be able to save at the breakeven point.
Too bad this doesn’t yet work for those who have chosen to be car-free. In particular paying per mile for insurance on those occasions when renting would potentially be interesting if it was less than those high per-day rates from auto rental companies.
My questions:
1) Are there potential penalties for very skilled and safe drivers that enjoy a spirited drive on an open road? This seems like a slippery slope for driving enthusiasts.
2) Is there not a chance that people who drive less are more likely to have an accident?
Or ways to deactivate for those few Track Days, some PIR where you can enjoy lots of toys with wheels or the amazing and epic ORP!!
Maybe we are looking at it the wrong way… maybe the GPS can be used to fine people who use the left lane as a travel lane…
Next they will put a chip on your bike…or floride in your drinking water (tinfoil hat, tinfoil hat)
Niko,
We don’t change your pricing based on your driving behavior. You can drive as fast as you want, wherever you want.
People who drive less may be less skilled, but the data bears out that those who drive less are involved in less accidents. Otherwise, the business model wouldn’t make sense!
I figured we’d save 20% per year if we drove our Prius C 10K mi. We have real good full coverage. I also wonder how good this insurance co. would be if one were in a serious accident or any accident. Would they be generous or stingy? Do they have good lawyers? Represent their clients well? The unknowns make it too risky for us.
We have customer advocates that help you through the Claims process and a 15-year veteran of Claims from Progressive running our Claims department. We are underwritten by Dallas National Insurance and will be able to pay out any claims.
I LOVE this idea…and I love that this startup is starting in Portland first. I for one, live in downtown and use my car only for commuting to Hillsboro for work. In a year I only drive approx. ~8000 miles. My current plan is about $100, I have a perfect driving record and excellent credit…so this plan would save me a lot!
JT, did you look into getting a quote? Check out our website and you can get a QuickQuote in about 2 minutes. Enter a little more information and we can give you a final Quote. If you drive only 8000 miles a year, you are very, very likely to save with MetroMile.
That’s a great news, I will suggest the same to my insurance company as well coz I too drive very less.
The pricing plan seems like a fine option for those who want it, and those who don’t can simply choose something that works for their situation. Not a big deal.
The scary thing about this article is the nonchalance with which the insurers describe the tracking technology.
It’s a safe bet that all insurers are looking into tracking and recording of our driving habits, route choices, the times of day that we drive, how often the car’s oil gets changed, etc., etc.
They’ll then use that data as an excuse to charge us more for insurance, not less. Their actuaries will claim the data shows that our wallets are not quite empty.
Oh, and all that data will no doubt live on Internet-connected servers.
Still far too expensive. If a person drives 1,000 miles per year he should be paying nearly 10X LESS but insurance companies offer no discount or a paltry one, hurting those who are poor and can’t afford to be driving all the time. I typically use my car 20 times per six months. Each time I have to pay for $5 of gas and $6 in car insurance, even with the low rate compared to others but is still not related to my actual risk.
The other things is insurance companies are not doing anything about those who are poor and have inexpensive cars. If my car is worth $1,000 and everyone else decides they want to drive a $100,000 car, my rates have to get jacked up. It makes so little sense. I came up with a sensible formula in the book “Thoughtful Living” to deal with this.
Too bad I can’t be employed as an actuary – I think companies want less than brilliant employees who just play along with the game and are merely mediocre in what they do.
I live in Seattle. In a year approx.~4000miles. If occasionally I drives to Vancouver, Canada. How’s Metromiles count the miles? Will Metromiles cover the insurance if there is an accident in Canada?
M.S, sounds like you would be the perfect candidate for Metromile. The way we track mileage is with a device called the Metronome. It plugs in to the OBDII port in your car (found in every car in the U.S. that is ’96 and newer). And yes, we will cover you in an accident in Canada & the U.S!