If you drive fewer than 12,000 miles a year, you should tell your auto-insurance company to take a hike, entrepreneur Chris Gay contends. He’s the founder and president of MileMeter, a Dallas company that last year became the nation’s first to charge drivers for auto insurance by the mile.

Gay’s an Army brat who came to Texas to swim competitively at The University of Texas, then dove into commercial real estate and nearly drowned in the dot-com boom. He eventually joined his father in defense contracting but, in the back of his mind, always believed the auto-insurance industry was ripe for change.

It helped that the Texas Legislature revised insurance laws in 2001 to allow a cents-per-mile alternative to traditional dollars-per-year pricing. With his wife’s blessings, some personal savings, and the backing of venture capitalists—after almost 200 rejections—Gay issued the company’s first by-the-mile insurance policy in October 2008.

Texas is the country’s second-largest auto-insurance market, Gay says, even though 20 percent of the state’s drivers are uninsured. Which they might not be, he says, if they would buy auto insurance like people pre-pay for cellphone service: purchase between 1,000 and 6,000 miles of coverage at a time by credit card, online. The company’s target market: people who don’t drive a lot—those who work from home, use public transportation, live in small towns, own multiple cars, or are college students.

MileMeter recently consolidated its three offices into one in downtown Dallas. The company employs fewer than 100 people, though Gay won’t disclose exactly how many for competitive reasons. “We are extremely financially healthy,” he says. “It’s made the insurance industry take notice.”