Pay as you drive insurance..... thoughts?

[star_deceiver]

California proposes “pay-as-you-drive” insuranceLos Angeles, California - California’s Department of Insurance has proposed a regulation that would allow insurance companies to offer auto coverage plans that are paid for by the mile. Similar to prepaid minutes for cellular phones, the plan would allow drivers to prepay for a certain number of miles for a specified amount of time.The regulation would also allow insurers to offer discounts for those who opt to purchase a mileage verification policy, whereby drivers pay for miles actually driven, instead of the estimated number currently used as a factor in determining rates. Methods of verifying mileage include odometer readings by an insurance agent or broker, automobile repair centres, smog check stations, self-reporting, or a device installed in the vehicle to monitor miles driven. Regulations prohibit insurers from using such devices to obtain a driver’s location.Such programs would also provide an incentive of premium discounts for not operating over a predetermined number of miles, encouraging residents to drive less, with a resulting drop in congestion, fuel consumption and emissions. The Environmental Defense Fund estimates that if 30 per cent of California drivers purchase a pay-as-you-drive policy, it could eliminate 55 million tons of CO2 emissions and save 5.5 billion gallons of gasoline through 2020.

[star_deceiver]

I see this as a benifit for some but others would have quite the $$$ surprise come bill time!

[lovemyraffe]

There was a similar idea I heard about a few weeks ago...instead of having a tax on gas, you pay a tax based on how many miles you drive per year. This seems like a decent idea for insurance, but not I do not want this to happen for miles. It will take away some of the advantage of having a high mpg vehicle.

[northvibe]

may work for people who barely drive, they could pay much less for insurance...but if it made everyone do that lots of people that drive many miles for work would be f'd. like myself.

[lovemyraffe]

Quote, originally posted by northvibe »may work for people who barely drive, they could pay much less for insurance...but if it made everyone do that lots of people that drive many miles for work would be f'd. like myself.I drive a bunch too. 35-40k miles/year.

[northvibe]

Quote, originally posted by lovemyraffe »I drive a bunch too. 35-40k miles/year.yup me too...I hate seeing that many miles on my car

[kostby]

When I worked in the insurance industry (ten years ago) there was discussion about selling car insurance as a per-gallon cost when you filled up with fuel.That way, the insurance company and the government wouldn't need to track mileage, eliminating about a gazillion dollars of costs and thousands of employees needed to 'verify' travel, and it would be truly 'pay as you go'. Fuel efficient vehicles would automatically have a lower cost to insure per mile than gas guzzlers.

[star_deceiver]

Unfortunatly, doing it by the mile will make them more. And wouldn't be doing it by the gallon require more equiptment on the car to record how much gas you use. Driving a huge SUV only 2 blocks every Sunday will use a lot less gas the commuting 50 miles a day in a Prius.

[kostby]

It's really a very simple idea: Car insurance would be purchased automatically with a mandatory fee on gasoline at the pump AT THE TIME YOU BUY THE GAS. That way, there are no uninsured motorists. Example: The auto insurance cost is $2.00 per gallon (completely hypothetical number for the purpose of illustration). You buy 10 gallons of gas, so you automatically pay $20.00 for insurance plus the cost of the gasoline.Each time you refuel, you pay the going rate for insurance and for gas in that area, based upon the overall accident/injury/theft rate for the region.The insurance rate could be different in different parts of the country. In a rural area, it might be $1.00 per gallon. In a congested urban area with lots of crashes, injuries, and auto thefts, it might be $10.00 per gallon.If you don't drive much, you don't buy much gas, and live in a low-traffic area, you don't pay much for insurance.If you drive a lot, you buy a lot of gas, and live in a high-traffic area, you pay a lot for insurance.And that's not a great deal different than insurance is priced is now!Of course there are fallacies in a single-price pay-per-gallon regional insurance plan:1) The million dollar Ferrari Enzo driven by a 60 year old software billionaire gets insured for the exact same rate as a 1988 Hyundai Accent beater driven by a 16-year-old kid who just got his license.2) The person who uses 1000 gallons of gas per year (= $2000 insurance cost for each example) driving a Prius (50 mpg) goes 50,000 miles. The person who drives the Chevy Silverado (18 mpg) goes 18,000 miles. The person who drives a supercharged Pro-street 454 1969 Chevelle (2.5 mpg) goes 2,500 miles.But it's still an interesting concept.