Why You Should Consider Pay-Per-Mile Insurance

Posted by Ben Davidson about 6 months ago

Why You Should Consider Pay-Per-Mile Insurance 


Car insurance is based on risk. The greater the risk, the greater the cost of the premium. Mileage is one of the biggest risks in the car insurance game. The more you drive, and the further you go, the more likely you are to be involved in an accident. In this way, drivers who do not drive very often, or who drive short distances, are considered to be low-risk. Of course, your insurance provider will also consider other influencing factors, such as your age, your driving history, and the car you drive.



What is pay-per-mile insurance?


To those of you not familiar with pay-per-mile insurance it is exactly what it says on the tin. You pay an insurance premium based on your driving habits. Usually this will mean that low mileage drivers will pay less as they drive less. If you are a student who uses a car during holiday time, or perhaps someone who is retired and doesn’t commute to work everyday, then this will likely be a good option for you.


So, how does it work?


Essentially what happens in most cases is insurance providers will be able to monitor what you are driving and see your mileage, personalizing your rate depending on how many miles you cover. This means that drivers who do not use their vehicle often can save  money on what would otherwise be overpriced coverage. There is also a system whereby sensible and careful drivers get a better insurance premium. This is sometimes called pay-as-you-go insurance. 


If you cover less than 10,000 miles per year, it is likely that pay-per-mile insurance works out far cheaper for you than standard insurance premiums. Check out ConsumersAdvocate's Metromile review and see if this pay-per-mile service could benefit you. 


How can I work this out?


According to the United States Department of Transportation Federal Highway Administration, the average mileage of an american car is 13,476 miles per year. This means over 1,000 miles per month! That sounds like a lot, and statistically it is overwhelmingly male drivers who have higher mileages and who also have more accidents. Instead of guessing your average mileage make sure you work out your personal mileage accurately to ensure that you qualify for the lower premium of a low mileage driver.  It isn’t enough to check your gas mileage display in your vehicle if you haven’t made a record of your mileage over the years. Check your service record for an accurate recording of your mileage, and whatever you do don’t just guess. If you get your numbers wrong you could seriously impact your insurance premium or even invalidate your coverage entirely. In a similar way, if you overestimate your mileage you could be paying much more.


If you are a younger driver, it is difficult to get low-cost insurance. If you have a proven record of no accidents and no traffic misdemeanours, then your insurance will almost certainly be less. In a similar way, if you have a low mileage you can avoid some of the costly premiums that are out there.


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