A revolutionary way to calculate car insurance coverage is being launched in Texas. MileMeter charges car insurance coverage based on the number of miles driven.

By the mile

KVUE's Olga Campos reports

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Cale Moody cuts his transportation costs by riding his motorcycle, but it's not the only way he gets around.

"I bought a Jeep as my second form of transportation and that's when this whole thing started because I drive it maybe once or twice a month," he said.

The limited use of Moody's Jeep makes him a perfect candidate for MileMeter.

"MileMeter is the first company in the nation to offer by the mile insurance," said Chris Gay. "You should only pay for what you use, so if you drive less you should pay less. It's very difficult to get into an accident when your car is parked".

Gay says consumers who drive less than 12,000 miles a year would save between 25 to 75 percent on their insurance policies. The company relies on a driver's honesty to report odometer readings, and it doesn't ask for past driving history or a credit report.

It works for Cale Moody. "I was surprised by the convenience. It literally took me 10 minutes. I needed my age, my zip code, my VIN number and my odometer reading," he said.

For those with limited driving, it's simple and makes sense. The only unanswered question is what took so long for a per-mile policy since a change in Texas law cleared the way for it back in 2001.

"I think the industry for a long time has made money off the backs of low mileage drivers," said Gay.

Based on strong initial response, he predicts his company will expand nationwide by 2010. The per-mile policy has the backing of local cyclists and environmental groups since it also offers a financial incentive to drive less.