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Pay-per-mile insurance provider targets urban drivers

Free and insurance do not go together. Yet an upstart car-insurance carrier is bridging the two with a free diagnostic device that tells you how much you drive, and how much money you could save by purchasing their pay-per-mile insurance.

Officially launching in Illinois today, MetroMile is appealing to car drivers who want to pay less for driving less.

“A lot of people are overpaying for car ownership right now,” says Dan Preston, CEO of MetroMile.

MetroMile is intended for people who drive less than 10,000 miles a year annually and who live in metropolitan areas. It estimates annual savings of $400.

“We’re trying to reinvent urban car ownership,” says Preston, who lives in San Francisco and only drives 2,000 to 3,000 miles annually.

Illinois is the fourth state of operation since the insurance technology company launched in late 2012 and the third state along with Washington and Oregon to have the insurance option.

The San Francisco-based company offers two products: a complimentary diagnostic device with an app, and a pay-per-mile insurance policy, which is the only one of its kind in the U.S.

The device, called Metronome, is nothing new. The diagnostic device plugs into your on-board diagnostic port (OBD), typically found under the steering column. OBDs were built into all 1996 and after models as required by the Clean Air Act Amendment. The OBDs are the electronic pulse of the vehicle, used to transmit info to everyone from mechanics to state emission test facilities. And in recent years, to insurers.

Insurance companies offer usage-based insurance that can lead to good driving discounts. Progressive, Allstate and State Farm, to name a few, have diagnostic plug-ins that report speed, hard braking incidents, air bag deployments, routes traveled, time of day travel and other risk-based data, including mileage.

This trackability in exchange for a reduced rate has led to concerns about privacy and being penalized for riskier driving behavior.

MetroMile uses the device only to track mileage.

While the digital age enforces the maxim that information is power, the question remains as to who is holding the power.

MetroMile says it’s the consumer.   

“We want to put data back into the driver’s hands to help them save time and money,” says Preston, who adds that the customer owns the data. “We don’t look at how you drive, just how much you drive. You can turn [GPS] off and never use it.”

With other usage-based systems, such as Progressive’s Snapshot, an initial month of data tracking will lock you into a rate for 6 months.

MetroMile offers a flat monthly fee between $20 to $45 based on the usual actuarial science of where you live and your driving history, plus a per-mile cost that ranges from 2 cents to 11 cents. The per-mile rate is based on the same factors.

The monthly rate remains the same unless you change regions or incur a ticket or accident. The variable per mile rate lets you pay for what you use. The formula stays the same if you go over 10,000 miles. 

With only 30 employees, the upstart company offers the Metronome and the iOS app for free as a way to induce users to purchase the insurance. An android-compatible app is due in the summer.

The device offers 4 core features, according to Preston, all designed to provide better information that can save you time and money. It helps manage your mpgs so you can determine the cost of certain routes at certain times; it can help find your car (while it can’t help you find your phone, there is a more detailed desktop dashboard available); it can recommend routes and times based on driving habits; and it creates diagnostic reports indicating what’s wrong with your car or when your car may be due for service.

The diagnostic tool can help identify simple solutions to dreaded check engine warnings, such as tightening your gas cap, or forecast when minor problems can become major ones.

The reports have no bearing on the insurance, however.

“The only thing the device does on the insurance side is count the number of miles you drive,” he says.

The app has grown, or been downloaded, 400 percent more in the first 45 days of 2014 than in 2013.

As the cost of car ownership increases, and with more people using public transportation and buying fewer cars, MetroMile is addressing the part of the driving population who are overpaying for car ownership. 

“Owning a car [in a city] is more of a hassle than it needs to be,” says Preston. 

rduffer@tribune.com

@DufferRobert

Copyright © 2014, The Baltimore Sun
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