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Overcome the Hassles of Launching a Pay-per-Mile Solution

Updated: Apr 22

Auto insurance is undergoing an unprecedented wave of change. Consumer attitudes are changing and customers are demanding more flexibility and customisation from their service providers, including their insurance companies. Take Revolut as an example, where customers pay for travel insurance only for the specific period that they are traveling. We believe that auto insurance must become more transparent and flexible, or else insurers risk losing their customers to competitors. 


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Enabling customers to pay only for how much they drive is an insurance “format” that we believe should be standard across the whole world. While some heavy drivers might not profit from such an offer, many others — like low-km drivers, multi-car owners, price-driven customers — should have an option to not overpay for insurance.


At Habit, we believe that true risk should be measured according to the amount of time a car is exposed to risk, that is, while driving on the roads. Our Pay-As-You-Drive solution is designed to let your customers pay only for what they drive while helping you reduce the environmental footprint by incentivizing them to access other mobility options.

First things first. How is distance driven tracked?


The way distance is tracked varies according to your requirements. Many software companies claim that some solutions are more viable than others, and while that might be true, we understand different insurance companies have different needs, so we make available several ways of tracking distance. You are the one defining the requirements of your program, according to your own KPIs, resources at hand, target market, etc.


Connected Cars


As a company who works well with Internet of Things’ devices, we are able to track distance directly from a connected car, i.e., a car with a built-in 3G modem that collects and shares data with other devices, including distance. Connected car manufacturers are increasingly open to sharing vehicle data with insurers but concerns with data privacy are slowing them down. However, while this is not a mainstream reality for all car brands, some data services platforms, commonly know as “neutral servers”, are already working hard at making car data available from as many car brands as possible, by facilitating an API to solutions providers like us. The good news is, depending on your product requirements, we can work well with these platforms and become readily integrated with the car brands they enable, which include BMW, Mercedes and Tesla. Also, all of them have a consent management process that guarantees that the driver grants or revokes access of their data at any time, so rest assured that data privacy is a topic well taken care of.   At the same time, we are working to become compatible with car manufacturers on our own and believe it’s just a matter of time before we become compatible with more and more cars.



Drivers connect their cars with their credentials and access relevant car data.


OBD-II dongles


An OBD-II (OBD stands for on-board diagnostics) is a small smart device that is plugged to the car’s OBD port, usually located under the dashboard. It works in a similar way as a “connected car” in the sense that car data, including distance, is collected from the device and sent out to other devices. OBD-II are versatile and useful for tracking car diagnostics and also distance. Some insurance companies had less positive experiences with this solution as it could lead to small imprecisions due to the fact that distance is calculated based off of location and number of trips. At the same time, distribution costs can be a bit high as you will have to purchase them and ship them to your policyholders. However, there are ways to dilute this cost on the overall policy cost or you can share this price with the policyholder. It’s a matter of evaluating your KPIs and available budget for such a program and understand if this solution makes sense. We have definitely seen many insurers across Europe and the United States resort to OBD-II devices to be able to get more scale (virtually every car has an OBD-II port and therefore can become “connected”) and launch a product to market faster.


Some examples of the best OBD-II devices currently in the market are: Automatic, AutoLink, KOBRA, and Autel. We work well with any OBD-II device in the market. Let us know which ones you would like to work with and we will get in touch with the manufacturers to facilitate the integration.




Customers are shown how to plug in the device and receive them in their homes.


Odometer reading picture


A simple way of tracking distance is with a picture of the car’s odometer reading, with no tracking devices involved. Our product is designed to let your customers take and upload a picture of their odometer reading through the app every so often. In the long run, you may want to reconsider other ways of fetching distance like the ones described above, however this is an option that is simpler to deploy and easy to understand.



Tracking distance with a picture of the car’s odometer reading is easy


How can my company and my customers profit from this Pay-As-You-Drive solution?


Our Pay As You Drive solution is much more than a tool to track distance. It is a full auto insurance product that enables a per-mile rating. The product was designed with several app features in mind that were built to fundamentally help you minimise risk, increase customer satisfaction and engagement and ultimately sell more products. Furthermore, you will have your own insurance tool to manage policies, claims and policyholders and have a 360º view of your product to better assess product ROI.


With Habit, your customers can:


  • Simulate a policy

  • Customize policy with preferred coverages

  • Connect a connected car or OBD-II

  • Take a picture of odometer reading

  • See policy summary before purchase

  • Purchase a policy with credit card

  • Add coverages after policy purchase, at any time

  • Make a call (to insurer, assistance provider, workshop repair)

  • Book an appointment (e.g. workshop repair)

  • Request assistance from a form (can send current location for faster assistance)

  • Get notifications and alerts (e.g. “the limit data to service your car is fast approaching”)

  • Get special offers (e.g. discount on DriveNow, discount on gas)

  • Submit a claim with a form (photo and video upload capabilities)

  • See relevant insurance documents

  • Access to and management of other insurance policies (e.g. Home and Pets)

  • See generic information about insurer (e.g. website, FAQ)



Customers can see the distance they drive, check policy details, add coverages, etc.



Get your pay as you drive insurance program up and running in a few weeks


It is easy for insurance companies to deploy flexible car insurance products with Habit.


Get a free demo now.

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