MileMeter Blog

I would like to personally and publicly thank the National Organization for Women for their support of MileMeter. NOW generously sent an alert to their membership on 3 December 2007 urging a vote for MileMeter in the AWS Startup Challenge. As a result, MileMeter received a surge of votes and interest which led to excellent opportunities for MileMeter. Thank you, NOW! An excerpt from the alert reads:

"We need your vote today in an Amazon contest! We're happy to report that MileMeter, a per-mile auto insurance company which NOW's Insurance Project has been mentoring, is a finalist (over 900 applicants) in Amazon Web Service's Start-Up Challenge. Why NOW's support? Because charging for insurance in this way is non-sexist, helps the environment, and helps enable lower-income people to retain their cars. In a word, it's fair."

The NOW alert created a dialogue on the ability of a financial product to impact social equity. For instance, when I arrived at the Amazon.com offices for the contest, one of the first questions I was asked was, "How is MileMeter insurance non-sexist?"

How MileMeter insurance is non-sexist

Although it is possible to have a vehicle accident while your car is parked, it is uncommon (e.g. you have Collision coverage on your vehicle, parked it on the curb, and someone clipped your vehicle. As a result of which your insurer pays a claim to you based upon your Collision coverage). In general, your risk of getting into an accident is highly correlated with driving. When all other actuarial criteria are held constant (age, location, vehicle, etc), vehicle accident frequency has an almost linear correlation with vehicle miles traveled.

When you drive you are exposed to hazardous road conditions and unskilled and distracted drivers. For every mile you drive, you are at risk. For every mile you drive, you are more likely to be involved in an accident (irrespective of who caused the accident), and thus file a claim with your insurer.

Since women -- on average and as a national group -- drive less than men, women are less likely to be involved in accidents that cause their insurers to pay claims. Traditional term insurance generally does not account for the difference in vehicle miles traveled (VMT) by women, so women overpay for insurance coverage. By pricing insurance by the mile, MileMeter therefore more accurately assigns a cost to any driver (male or female) for the risks they incur as a driver.

MileMeter does not discriminate between male and female drivers, rather we "discriminate" between low- and high-mileage drivers by assigning a cost-per-mile for insurance. If MileMeter quotes a price of 3 cents per mile, a low-mileage customer might purchase 3,000 miles of coverage from us for $90 ($0.03 * 3000) whereas a higher-mileage customer might want 6,000 miles of coverage for $180 ($0.03 * 6000). Lower-mileage drivers -- relative to the average -- thus have a financial incentive to drive less and should experience insurance cost savings relative to traditional auto insurance plans. Drivers who drive less than the average per vehicle per year (nationally, this is approximately 12,000 miles per vehicle per year) should experience financial savings with per-mile auto insurance.

For more information on how cents-per-mile insurance impacts social equity, I recommend reading the articles posted on the Cents Per Mile Now project website. Cents Per Mile Now is sponsored by the National Organization for Women, and has been instrumental in advocating and supporting distance-based auto insurance.