A New Take On Auto Insurance: Pay By The Mile

City drivers stand to save about $500 annually if they drive fewer than 12,000 miles a year.

After launching in Illinois, Washington, and Oregon, Metromile is expanding its pay-by-the-mile auto insurance to California. The San Francisco company also unveiled a refreshed mobile app to give drivers insight into their vehicles and trips.


Metromile’s insurance targets the two-thirds of American drivers, primarily urban dwellers, who rack up fewer than 12,000 miles on the odometer each year. “There’s a huge number of people who are overpaying for their insurance,” CEO Dan Preston told Fast Company. On average, the company says, Metromile drivers save 50% to 60%, or about $500 a year, on their policies.

Traditionally, auto insurance providers make more money from low-mileage drivers, whose premiums subsidize high-mileage drivers. “We’re applying a curve so that the amount of margin per customer is equal across the board,” Preston said. “It’s a much fairer way of doing insurance.”

This isn’t the first time the insurance industry has turned to a variable-pricing model. Progressive’s Snapshot, for example, uses a device to track and analyze driving habits, such as how hard a driver brakes, and adjusts its rates accordingly.

Along with its launch in California, Metromile also debuted a new app to visualize car data. The app is able to track fuel consumption, fuel levels, car location, and vehicle health by communicating with Metronome, a product that plugs into the vehicle’s on-board diagnostics port. Like a USB port for automobiles, the OBD II port exists on all vehicles manufactured since 1996. Any driver in the four states in which Metromile operates can request a free Metronome via its website.

If the car is experiencing any issues, the app can help diagnose the problem. Users can also send along the app’s notes to one of Metromile’s mechanics on staff, who then helps identify the issue and provides a repair estimate.

In San Francisco and Chicago, the app even sends drivers street-sweeping alerts to help them avoid parking tickets. The company plans to roll out this feature to other cities.


“There’s a lot of hassle associated with having a car in the city, so we’re looking to make that easier,” Preston said.

About the author

Based in San Francisco, Alice Truong is Fast Company's West Coast correspondent. She previously reported in Chicago, Washington D.C., New York and most recently Hong Kong, where she (left her heart and) worked as a reporter for the Wall Street Journal.