car insurance
Last month, California moved one step closer to allowing pay-as-you-drive policies that would allow drivers to buy insurance as needed, according to a recent article by The Sacramento Bee.
According to the Bee, Steve Poizner, California's Insurance Commissioner, recently released "regulations permitting and authorizing mileage verification for pay-as-you-drive, without dictating what form such plans must take."
Much like pre-paid phones, pay-per-mile policies only charge insurance for the amount of miles used, so if people drive less, their car insurance will be cheaper.
Environmentalists are hopeful that by allowing people to pay per mile, drivers may be encouraged to take fewer trips by car and instead walk, bike or bus more in order to keep their insurance rates down.
Mile-Meter, which is only available in Texas, is the first plan to offer motorists six-month policies that come with chunks of insured miles, ranging from 1,000 to 6,000 miles.
"Our take is that half the market out there is being overcharged and underserved – and that's who we aim to address,” said Chris Gay, MileMeter founder and chief executive officer, who expects that it won’t be long before his business comes to California.
Though California insurance premiums are already based partly on miles driven, thanks to the passage of Proposition 103 several years ago, insurers say that they don’t have the authority to actually check motorists’ estimates, which most likely means that at least some people are abusing the system.
In addition to insurers, environmental organizations like the Environmental Defense Fund are also in support of the pay-as-you-drive policies, and even the California Air Resources Board seems to be on board.
"They may cut back in terms of leisure driving," said Ken McEldowney of Consumer Action. "[Buyers] may combine trips to the store in a way they weren't doing before."
A study conducted by the Brookings Institution last year backs up McEldwoney's statement. According to the study, it found that pay-as-you-drive would drop driving by 8 percent nationwide – and oil consumption by 4 percent – if all motorists paid for car insurance by the mile.
In addition, the research institution found that two-thirds of U.S. households would save money – about $270 per car – under pay-as-you-drive policies.
But despite the environmental and even economical benefits that pay-as-you-drive could offer, not everyone’s happy with the possibility of more regulation.
"I don't want anybody tracking me, even just for mileage – no," said Michael O'Gara, 60, of Davis.
"I wouldn't do it," added Linda Nguyen, 35, of Sacramento. "Even when I rent a car, I don't want (it billed) by the mile."
Comments listed below The Sacramento Bee article also portrayed consumers’ varying reactions to pay-as-you-drive policies.
For example, one commenter wrote, “It is clear that they want to control us - in this case by how much we drive. And they are perfectly willing to use increasingly draconian tools and processes to shape and guide the behavior of American citizens and the market to achieve their nefarious goals.”
In comparison, another commenter, in support of the policy, wrote the following: “Perhaps those who are against variable (per-mile or per-hour) insurance pricing would like individuals who drive less than them to continue to subsidize their insurance rates. No thanks.”
Judging by the wide range of views, it’s clear that pay-as-you-drive policies will continue to spark debate amongst consumers for some time.
Last month, California moved one step closer to allowing pay-as-you-drive policies that would allow drivers to buy insurance as needed, according to a recent article by The Sacramento Bee.
According to the Bee, Steve Poizner, California's Insurance Commissioner, recently released "regulations permitting and authorizing mileage verification for pay-as-you-drive, without dictating what form such plans must take."
Much like pre-paid phones, pay-per-mile policies only charge insurance for the amount of miles used, so if people drive less, their car insurance will be cheaper.
Environmentalists are hopeful that by allowing people to pay per mile, drivers may be encouraged to take fewer trips by car and instead walk, bike or bus more in order to keep their insurance rates down.
Mile-Meter, which is only available in Texas, is the first plan to offer motorists six-month policies that come with chunks of insured miles, ranging from 1,000 to 6,000 miles.
"Our take is that half the market out there is being overcharged and underserved – and that's who we aim to address,” said Chris Gay, MileMeter founder and chief executive officer, who expects that it won’t be long before his business comes to California.
Though California insurance premiums are already based partly on miles driven, thanks to the passage of Proposition 103 several years ago, insurers say that they don’t have the authority to actually check motorists’ estimates, which most likely means that at least some people are abusing the system.
In addition to insurers, environmental organizations like the Environmental Defense Fund are also in support of the pay-as-you-drive policies, and even the California Air Resources Board seems to be on board.
"They may cut back in terms of leisure driving," said Ken McEldowney of Consumer Action. "[Buyers] may combine trips to the store in a way they weren't doing before."
A study conducted by the Brookings Institution last year backs up McEldwoney's statement. According to the study, it found that pay-as-you-drive would drop driving by 8 percent nationwide – and oil consumption by 4 percent – if all motorists paid for car insurance by the mile.
In addition, the research institution found that two-thirds of U.S. households would save money – about $270 per car – under pay-as-you-drive policies.
But despite the environmental and even economical benefits that pay-as-you-drive could offer, not everyone’s happy with the possibility of more regulation.
"I don't want anybody tracking me, even just for mileage – no," said Michael O'Gara, 60, of Davis.
"I wouldn't do it," added Linda Nguyen, 35, of Sacramento. "Even when I rent a car, I don't want (it billed) by the mile."
Comments listed below The Sacramento Bee article also portrayed consumers’ varying reactions to pay-as-you-drive policies.
For example, one commenter wrote, “It is clear that they want to control us - in this case by how much we drive. And they are perfectly willing to use increasingly draconian tools and processes to shape and guide the behavior of American citizens and the market to achieve their nefarious goals.”
In comparison, another commenter, in support of the policy, wrote the following: “Perhaps those who are against variable (per-mile or per-hour) insurance pricing would like individuals who drive less than them to continue to subsidize their insurance rates. No thanks.”
Judging by the wide range of views, it’s clear that pay-as-you-drive policies will continue to spark debate amongst consumers for some time.
