What is Car Insurance by the Mile?

Almost everything that you do with a car is measured by the miles. Even the Internal Revenue Service allows car expenses to be computed per mile. One of the only exceptions to this rule happens when you buy car insurance. It is normally sold by the month or year. This practice is starting to change for some people in some places.

Texas enacted a law to compel insurers to offer insurance by the mile.

The principle behind this insurance is that if you drive more, your car insurance will cost more. Driving less will result in car insurance savings. That Texas would prove to have such innovation is not really a surprise. It was one of the first states several decades ago to require the electric companies to buy back any electricity generated by its customers with windmills and other devices.

You have to provide proof of how many miles you have driven.

The tricky part of buying car insurance by the mile is to pay for the correct number of miles. Some insurance companies are offering devices that can measure and transmit the number of miles that you log in your car. Most settle for photographic evidence to substantiate the miles you have covered. It is a pretty simple process, but it does require honesty and accuracy.

The policy goes into force with an estimate of your driving needs.

Usually this is done with a six month estimate of how many miles you will drive the car. At the end of six months, you provide the proof of the actually miles and either get a credit or pay for the excess. If it become obvious that you will exceed the miles agreed upon, some companies will allow you to increase your needed miles during the policy term.

There are mileage minimums to let the insurance company make a profit.

The fewest number of miles that you can buy is about 1,000 per six month period. If you drive less than this, you will have to pay for this number anyway. Any miles agreed to above 1,000 will be treated according to the policy terms for credit or extra amounts due. The cost runs about two cents or so per mile.

The idea has not be a huge hit in other states.

Whether because of the efforts of insurance lobbyists or just a reluctance to adopt new ideas, few states have signed on for this type of insurance. Even if it is not required as an option the way it is in Texas, some states have not passed enabling legislation to allow it to be sold within the state boundaries. Buying insurance by the mile will require that you check with your specific state or move to a state that allows it.