From Guest Blogger Jordan: A New Start-Up Offers Gas Insurance for Those Fearing That Gas Might Go Up Again

Drivers were certainly very happy when gas prices fell well under $3 per gallon in late 2014, hitting a four-year low, but most auto industry observers, along with many car owners, were well aware that sooner or later, the time will come when prices are going to start rising again. Even though at the moment, national average prices are still under the $3-mark, hovering around $2.40, most oil industry experts expect a gas price spike to occur pretty soon, so drivers might face higher fuel costs in the months to come.

A new start-up based in Houston is now trying to protect drivers from fresh headaches caused by volatility in gas prices, with a new type of insurance product that aims to offset potential financial losses due to gas price spikes. LoveMyGasPrice is a new company that offers gas insurance, to protect drivers against sudden rises in gas prices, which are expected to happen in the near future.

Car owners can purchase a gas insurance plan at Lovemygasprice.com, which will cost them $3.99 a month, and get a refund if prices surpass $2.75 a gallon, the cap that set by the company at the moment. This is considerably above the national average of $2.39. The company will reimburse clients through PayPal, paying them the difference between the cap and the gas price index. With this kind of cap, drivers could save up to $240 a year, if gas prices average $3.75 over the course of 12 months.

The price cap is higher in California, where the average gas price is $3.15 a gallon, so Lovemygasprice.com will refund California drivers if gas prices exceed the $3.75 a gallon mark.

“People have car insurance, people have health insurance and I think if you take a similar look at gas prices, let’s be glad they’re down, and we have that extra money. But wouldn’t it be prudent to spend a few extra dollars every month to make sure you don’t get a big, unexpected hike in what you’re paying for at the pump?”, stated Larry Weil, CEO of LoveMyGasPrice.

While getting gas insurance might seem like a pretty good idea to most drivers, the product offered by Lovemygasprice.com has its flaws. For starters, the company says that the current price cap will only be reconsidered in a year, meaning drivers would not get such significant refunds if gas prices rise substantially in the meantime, and there are many signs pointing to it.

What’s more, LoveMyGasPrice doesn’t take into account differences in price between states, with the exception of California, which means car owners in different states might get different refunds, even though they would be paying the same premiums. But, they do allow clients to cancel any time, which is certainly convenient.

In any case, this is definitely an innovative business model that taps a potentially highly lucrative market, with LoveMyGasPrice betting on the fact that gas prices are largely unpredictable, and that they can go up again unexpectedly at any given moment, considering that they are affected by many different factors that can not always be controlled.