Car insurance for 4.1 cents a mile

This post comes from Des Toups at partner site CarInsurance.com.

When it comes to cars, it's usually better not to do the math.

Adding up your gas bill, then dividing by your mileage, might give you a shock: At $4 a gallon and 20 mpg, that's 20 cents per mile. Do the same with your car payment and your car insurance bill and you may find you are leaving a trail of dollar bills in your wake.

But suppose you've already done the math and were shocked enough to park the family Camry in favor of a bus pass. You've still got the car payment, but you are saving a bundle on gas.

It's possible your car insurance bill has gone down as well. Did you call your insurer? Most insurance companies will put you in a lower risk category when mileage falls beneath a certain threshold -- after all, the less time you spend behind the wheel, the less the risk that you'll hit something.

The typical low-mileage discount is 5% to 15%. If you decide to let your insurance company monitor your mileage -- programs are typically called usage-based insurance or pay-as-you-drive -- the savings can be much bigger. (Here's a look at usage-based discounts from the major insurance companies.)

Yet ultimately you are not in control of how much you spend.

Now a California company says it has a way to fix that: car insurance for low-mileage drivers at a fixed, per-mile rate.

"Millions of people are making conscious decisions to bike, walk and use public transit more often, benefiting the environment and livability of our cities," says Steve Pretre, CEO and co-founder of MetroMile. "Traditional car insurance pricing takes the money those people should be saving based on their reduced driving and uses it to subsidize people that drive more. That is unfair and we are setting out to change it."

MetroMile is launching its service today in nutty, crunchy Oregon, limiting its coverage to people who drive less than 10,000 miles a year. Car owners plug in a small device -- the "Metronome" --  that transmits mileage in real time, and pay a base rate plus a few cents a mile.

The traditional insurance rules still apply: Risky drivers pay more.

We couldn't resist doing the math. We compared car insurance rates for a 40-year-old male driving a Honda Accord in Portland's 97223 ZIP code through the CarInsurance.com online quote engine and through MetroMile's online estimator.

Based on a 5,000-mile-a-year estimate, we found rates from $799 to $1,814 a year from major traditional insurers. While that includes a discount for self-reported low mileage, it doesn't reflect any savings from a pay-as-you-drive plan, which is calculated after the driver has enrolled and used the reporting device for a period of time.

MetroMile's pricing for the same coverage on the Accord driver is a base rate of $44.95 a month plus 4.1 cents per mile. At 5,000 miles a year, the cost would be $803.58. One nifty touch is that daily mileage is capped at 150 miles, so a trip across the mountains to Grandma's house doesn't become prohibitively expensive.

Expect to see more of these kinds of high-tech savings plans as cars become ever more connected and insurers become ever more savvy about identifying and rewarding the safest drivers. A previous effort, this one in Texas, closed its doors in April.

More on CarInsurance.com and MSN Money:

• The best states to save on car insurance
• Your lifetime car insurance bill: $94,000
• Cut high-risk husband off your car insurance
• Smart Spending on the go: Get our app for Android or iPhone
• How to get a warning, not a ticket 
• When to drop collision and comp