California Moves Closer to Pay-as-You-Drive Insurance


These plans can take several forms. In Texas, MileMeter offers six-month policies of 1,000-6,000 miles that drivers refill when their miles run out. The company wants to move into California where it believes motorists are paying too much for insurance.

Other plans being considered by State Farm, Allstate and Progressive might offer a yearlong policy based on a projected mileage. At the end of the year, the insurer would either refund or bill the driver based on how much he or she went over or under the estimate.

The key is verification. Privacy advocates don’t like the idea of installing electronic devices into vehicles to track miles driven, but there are other options. Odometer readings by agents, DMV records or states with smog-check stations could all provide the verification.

Could this lead to a push by insurers to access other information such as when your vehicle is driven or at what speed in order to inflate rates? That’s a less appealing proposition.

Then again, a study by the Brookings Institute confirmed the environmental and economic benefits of by-the-mile insurance pricing. If all of the country’s drivers adopted this type of policy, driving would drop 8% nationwide and oil consumption would fall by 4%. Two-thirds of U.S. households would save an average of $270 per car.

Pay-by-the-Mile Auto Insurance Advances in California (Sacramento Bee)

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