Mileage Based Car Insurance

Apr 11, 2019 (0) comment

Mileage Based Car Insurance

Mileage Based Car Insurance

Mileage Based Car Insurance

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Low-mileage discount

A traditional low-mileage discount offers a break to drivers who rack up annual mileage under a certain threshold, such as 7,000 miles a year. In most states, according to data gathered for Insurance.com by Quadrant Information Services, the discount cuts the rates on a full-coverage policy by an average of 2 percent. (The savings are much bigger in California because of that state’s laws.)

Companies may require periodic or annual verification of your odometer reading. Some may send you a form to fill in and may match your estimate against third-party readings taken from public sources. Others may ask an agent to verify the reading, or for you to take a photo.

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Methodology

Pay-as-you-drive

Pay-as-you-drive models such as Snapshot and In-Drive use a telematics device to monitor your car, offer a potentially larger discount for people who drive less and very carefully. Ultra-cautious low-mileage drivers can save 30 percent or even more, but most drivers save less than that.

Most of these pay-as-you-drive programs offer a discount of 5 to 10 percent when you enroll, then use the data gathered to calculate a discount at your next renewal period.

Mileage Based Car Insurance

Insurance by the mile bills you monthly based on how much you drive. Only one company currently offers pure pay-per-mile coverage, and it estimates potential savings at 40 to 50 percent for those who drive less than 5,000 miles a year.

You get the same types of car insurance under each plan; instead of cutting coverage to save money, you’re limiting the amount of risk the insurance company faces when you hit the road.

MetroMile, a company that specializes in pay-per-mile policies, pitches its policies to urban residents who don’t drive much, especially millennials who have vehicles but often look for alternative transportation, from taking buses and subways to ride-sharing and cycling.

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CEO Dan Preston says his company’s model is simple: The less you drive, the less you pay.

MetroMile follows the same general technology of Progressive’s Snapshot, the best-known pay-as-you-go program. You stick a telematics device into the vehicle’s onboard diagnostics (OBDII) port in the hope of getting a discount. Most cars from 1996 and later have an OBDII port.

The MetroMile Metronome device then tracks your mileage, which is used to set your rates.

Customers are charged a base monthly rate determined by individual rating factors: the driver’s age and location, driving record, type of car and, in some states, credit and insurance history. At the end of the month, the driver pays the base rate plus mileage based car insurance on the miles reported through the Metronome.

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