Only pay for the insurance you use

Milemeter is a Dallas-based insurance company that plans to turn the motoring insurance industry upside down by changing the way insurance costs are calculated.

In the US as well as Australia, car insurance is calculated according to risk factors such as age, sex, postcode, car make and model and prior driving record.  Those risk factors are then applied to the cost of insuring your car for a 12 month period.

But what if your car, like mine, spends Monday to Friday in the garage? What if you're planning to go away for three months, during which the only risk to your car is someone backing into it while it's parked in the street? Do you really need insurance when your car isn't being driven?

Milemeter says no, and the companys CEO Chris Gay, says, "We were frustrated as insurance consumers. We wanted to create an insurance company that was fair, affordable, and made sense."

Admirable goals!

Milemeter won't start selling insurance until May 2008, but when it opens for business, you'll be able to buy insurance in mileage increments, as low as USD100 for 2,000 miles (about $36 per $1,000km.)

You'll register your odometer reading when you sign up, and if you try to make a claim once you're over your purchased miles, you're out of luck. Top up your mileage and your coverage continues.

The only downside is that your insurance mileage does have an expiry date - you can't expect to garage your car a few years until insurance costs come down!

As someone who cycles or catches the train to work all week, using the car mainly on the weekends, I can see a lot of benefits to this model.

Premiums will still vary according to your driving record, where you keep your car, and what kind of car it is, but importantly, Milemeter has also done its sums and decided it won't discriminate according to sex: male and female customers insuring the same car in the same location with the same driving record will pay the same premium. Vive non difference!

In a perfect world we'd also pay a different rate per kilometre depending on the speed we're driving, whether we're on a Victorian road or a NSW road (where roads are merely a line of potholes aligned between the painted lines.) Or how about  when we're talking on the mobile phone while we drive? Eating fatty foods and smoking... shouting at the kids in the back... driving with annoying bumper stickers... turning without indicating...

...perhaps variable rate insurance could discourage everything I hate about other drivers?

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