The Insurance Commissioner of California, Steve Poizner, has proposed an option for California consumers: pay-as-you-drive. If implemented, this would give motorists the chance to pay how far they've driven-- and theoretically, the more miles driven the more risk.
The mileage is based mostly on estimation, however the mileage would now be verified by odometer readings, automotive repair records, or a technological device.
The regulations would prohibit insurance companies from requiring policyholders to participate in this program, however companies may give discounts for participating.
The proposition is also supposed to have a green effect. According to the Environmental Defense Fund, they estimate that if 30% of California residents participate, California will be spared 55 million tons of CO2 between 2009-2020-- the equivalent of taking 10 million cars of the road. And furthermore, this would save $40 billion dollars in car-related expenses for vehicle owners.
In addition to the vehicle savings, the pay-as-you-drive program may be perfect for a large demographic of part-time drivers: teens. Since some companies do not offer part-time operator discounts, this would ensure that the young drivers are literally paying only what they are driving which would theoretically save them (and parents) huge premium every year.
Thank you to Insurance Journal.
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