Posted: Sat Aug 28, 2004 8:53 pm
Will customers be willing to buy car insurance by the mile?
The prevailing system for personal car insurance involves charging all drivers in a risk pool a similar price for six months of insurance. This includes those who commute by mass transit every day and save the car for emergencies. These occasional drivers are bearing the cost of the high-mileage customers in the risk pool.
Could a cents-per-mile system catch on? I contacted Cents Per Mile Now to find out. It turns out a variable-rate system, verified by odometer readings, is already widely used for commercial fleets. But except for a few token pilot programs, the major insurers have been reluctant to use the same system for personal car insurance.
The system works like this: Each customer reports their own odometer reading and purchases coverage for a certain number of miles. The beginning and ending odometer readings are then printed on their insurance card. In the event of a traffic stop, an officer can then easily verify whether or not their coverage is current.
The idea is that those who drive rarely will pay a fixed cost to cover the risk of theft, hail, etc. while paying only a modest rate for collision and other mileage-related risks. I would be interested in getting involved if anyone would like to start a cents-per-mile company in the Washington metro area.
Here is a partial email from Cents Per Mile Now:
Dear Mr. Larson,
I'm sorry to tell you that although consumer demand is building, no company (national or regional) is yet offering cents per mile insurance. We think that new startup auto insurers will be the first and the nationals then will be forced to compete or lose all of their "cream" -- customers with cars like yours mainly left at home.
It's the car insurance of the future and must come because the pay-per-car system is so dysfunctional for so many car owners. You can help accelerate the process by talking up the per-mile system, talking to Virginia state legislators, and by publicizing the centspermilenow website.
. . .
Patrick Butler, Ph.D.
Insurance Project Director
National Organization for Women
1100 H Street, NW, 3rd Fl.
Washington, DC 20005
202-628-8669 x 148
Cell: 512-695-5136 (best number)
email: pbutler@centspermilenow.org
http://www.centspermilenow.org
The prevailing system for personal car insurance involves charging all drivers in a risk pool a similar price for six months of insurance. This includes those who commute by mass transit every day and save the car for emergencies. These occasional drivers are bearing the cost of the high-mileage customers in the risk pool.
Could a cents-per-mile system catch on? I contacted Cents Per Mile Now to find out. It turns out a variable-rate system, verified by odometer readings, is already widely used for commercial fleets. But except for a few token pilot programs, the major insurers have been reluctant to use the same system for personal car insurance.
The system works like this: Each customer reports their own odometer reading and purchases coverage for a certain number of miles. The beginning and ending odometer readings are then printed on their insurance card. In the event of a traffic stop, an officer can then easily verify whether or not their coverage is current.
The idea is that those who drive rarely will pay a fixed cost to cover the risk of theft, hail, etc. while paying only a modest rate for collision and other mileage-related risks. I would be interested in getting involved if anyone would like to start a cents-per-mile company in the Washington metro area.
Here is a partial email from Cents Per Mile Now:
Dear Mr. Larson,
I'm sorry to tell you that although consumer demand is building, no company (national or regional) is yet offering cents per mile insurance. We think that new startup auto insurers will be the first and the nationals then will be forced to compete or lose all of their "cream" -- customers with cars like yours mainly left at home.
It's the car insurance of the future and must come because the pay-per-car system is so dysfunctional for so many car owners. You can help accelerate the process by talking up the per-mile system, talking to Virginia state legislators, and by publicizing the centspermilenow website.
. . .
Patrick Butler, Ph.D.
Insurance Project Director
National Organization for Women
1100 H Street, NW, 3rd Fl.
Washington, DC 20005
202-628-8669 x 148
Cell: 512-695-5136 (best number)
email: pbutler@centspermilenow.org
http://www.centspermilenow.org