Virginia is the first state in the United States to introduce pay by the mile car insurance. While this may seem strange considering Virginia is a state with a large majority of long-distance drivers, this insurance is not for every person. This new auto insurance, called Metromile, is for the 60 to 65 percent of drivers who drive under the suggested mileage each year.
This new car insurance is lower cost to the insurance company as well as to the drivers who are eligible. From the perspective of the insurance company, low mileage drivers are less risky because they are at less risk to come across potential hazards, auto glass damages, or accidents simply because of the amount of miles they drive. Metromile argues that drivers who drive longer distances are more likely to experience risks than do drivers who drive shorter distances.
This system operates using a device that plugs into the car’s computer system and monitors how many miles are driven. The individual would be charged a flat monthly rate and the mileage charges would then be added on top of that rate. It has been found that the average driver saves approximately five hundred dollars after switching to this new type of car insurance. This is because the driver is charged only for the amount of miles he or she puts on the vehicle. The only downside to this new auto insurance is that the company would know exactly where and when their drivers go to specific locations. For individuals who are aware of their privacy rights, this could be an issue.