Holberg Financial Blog

How To Win at Car Insurance the Metromile Way

Posted by holbergfinancial on May 2, 2017

Car insurance companies suck.


Well, most of them do anyways. They cost a lot, you never really get a say, and their customer service is actually quite poor. It's like going to the grocery store and only being able to select from nearly-spoiled fruits and vegetables while having to pay full price.

Fortunately, the old way of doing car insurance is going away. In this post, we'll look at how you can get better car insurance, pay less, and have a way better experience - for real this time.

Metromile is a new type of car insurance company that is a "pay-per-mile" company. Instead of just getting a monthly flat rate price for your car insurance, which has essentially always been the case, you now can only pay for how much you drive.

The way they track how much you drive is with a simple device that you can plug in to your car in under 1 minute, then you're good to go - just drive as normal and watch the savings pile up.

Some other aspects to know about Metromile:
  • You will pay a "base rate" per month for the insurance that is often quite cheap, around $15 - $25/mo.
  • You will pay a "mileage rate" per mile that is going to range in the neighborhood of 2 cents to 6 cents, approximately (this will be based on car, year, driving record, etc).
  • One cool feature: if you go on a long road trip, they have a "daily cap" of around 150 miles so even if you tear across the country and crush 600 miles in a day, you will only pay for 150 of those miles. Not bad.
  • They have an awesome website full of charts, graphs, and pretty data and app and it's paired with even better customer service. It's strange to say, but they actually care about their customers! 

6 months worth of awesome savings!

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Is it worth it?

One of the big questions is whether or not you'll actually save money by doing a pay-per-mile plan versus a fixed rate. The math is quite straightforward and the following example can help you figure out if your in the savings zone or if you might be better off sticking with what you've got.

If you are a moderate to heavy daily driver, Metromile probably isn't for you. The average American drives around 12,000 miles per year, or equivalently 1,000 miles per month. If you drive to work each day, then, to be conservative, your commute would be about 40 miles total or 20 miles each way. If you drive fewer miles to work per day - read on!

Specifically, to find the "break-even" point between your current policy and how many miles you can drive per month, use the following below and plug in your own numbers (you will need to get a Metromile quote for the best accuracy) in gauging your base rate and mileage rate.

  1. Take your current car insurance monthly price and subtract the Metromile base rate.
  2. Then take the result and divide by the per mile rate from metromile. Make sure that you turn it into a decimal. For example, if your mileage rate is 2.5 cents, then divide by 0.025.
  3. The result is how many miles you can drive each month before your Metromile cost is the same as your current cost. If you drive less miles per month than this number, you will almost certainly save money.

Metromile's Dashboard has lots of useful tools to gain insight

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Giving a numerical example:

  1. Current car insurance cost: $60/month. Metromile base rate: $20/mo. $60 - $20 = $40.
  2. Take $40 and divide by 2.5 cents (which is equal to 0.025). $40/0.025 = 1,600.
  3. Suppose you drive 1,000 miles a month, Metromile definitely makes sense. You will end up paying $20 + (1,000 x 0.025) = $45. 

This savings of $15/mo will net you an extra $180 per year. Again, not shabby!

It's Time to Take the Wheel:

Win the car insurance game. Check out Metromile. Save money. Be Happy. Switching to Metromile will take you 20 minutes and cancelling your previous car insurance will take you another 10. 30 minutes of your time - well worth it!


Topics: auto insurance, Insurance, Savings

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