Car Insurance For 4.1 Cents A Mile

When it comes to cars, it's usually better not to do the math.

Adding up your gas bill, then dividing by your mileage, might give you a shock: At $4 a gallon and 20 mpg, that's 20 cents per mile. Do the same with your car payment and your car insurance bill and you may find you are leaving a trail of dollar bills in your wake.

But suppose you've already done the math and were shocked enough to park the family Camry in favor of a bus pass. You've still got the car payment, but you are saving a bundle on gas.

It's possible your car insurance bill has gone down as well. Did you call your insurer? Most insurance companies will put you in a lower risk category when mileage falls beneath a certain threshold -- after all, the less time you spend behind the wheel, the less the risk that you'll hit something.

The typical low-mileage discount is 5 to 15 percent. If you decide to let your insurance company monitor your mileage -- programs are typically called usage-based insurance or pay-as-you-drive -- the savings can be much bigger. (Here's a look at usage-based discounts from the major insurance companies.)

Yet ultimately you are not in control of how much you spend.

Now a California company says it has a way to fix that: Car insurance for low-mileage drivers at a fixed, per-mile rate.

"Millions of people are making conscious decisions to bike, walk and use public transit more often, benefiting the environment and livability of our cities,” says Steve Pretre, CEO and co-founder of MetroMile. "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."

The meter is running

MetroMile is launching its service today in nutty, crunchy Oregon, limiting its coverage to people who drive less than 10,000 miles a year. Car owners plug in a small device -- the “Metronome” --  that transmits mileage in real time and pay a base rate plus a few cents a mile.