Friday, November 6, 2009

Pay-by-the-mile auto insurance advances in California

This is being touted as a means to save low-mileage drivers on their car insurance, and to discourage wasteful and unnecessary gas consumption and, yeah, I know, carbon emissions. Whatever. It's analogous to a hunter putting apples out in the woods for deer to eat. The deer thinks, gosh, isn't this great? There's this delicious pile of apples just sitting here on the forest floor. Awesome! And then the hunter shoots it through the heart and it drops dead. This is how the government advances tyranny. They present it as something good, when in reality it's meant as a violation. It's a poisonous snake in a box covered by stacks of hundred dollar bills. It's a trap. It's the military running DWI checkpoints. You don't have a problem with aggressive DWI enforcement, do you? Until those same soldiers are ordered to disarm you, or round you up and stick you in a quarantine, or a FEMA camp. And who wouldn't want to save money on their car insurance? Only one problem with that: you'll have to install a GPS monitor in your car that can track you wherever you go. No thanks. I'll just eat the leaves.

    Sacramento Bee -

    Car insurance by the tankful?

    Not quite, but California moved a step closer last month to pay-as-you-drive policies that could allow motorists to buy insurance like they do gasoline – a little at a time.

    Insurance Commissioner Steve Poizner released regulations permitting and authorizing mileage verification for pay-as-you-drive, without dictating what form such plans must take.

    The goal is to use per-mile pricing to entice Californians not to drive so much, thus easing air pollution, relieving traffic congestion and lowering the number of traffic collisions.

    A first-of-its-kind plan is MileMeter, available only in Texas, which last year began offering six-month policies with chunks of insured miles ranging from 1,000 to 6,000 miles. When the "tank" runs dry, motorists buy more.

    "We absolutely anticipate coming to California," said Chris Gay, MileMeter founder and chief executive officer.

    "Our take is that half the market out there is being overcharged and underserved – and that's who we aim to address."

    A more conventional pay-as-you-drive plan might offer a yearlong policy based on projected mileage, then upon expiration, provide a refund or rebill the driver based on actual mileage as verified by odometer readings or an electronic device.

    Spokesmen for State Farm, Allstate and Progressive insurance companies said they are considering the issue but have not decided whether to offer pay-as-you-drive in California. Such policies routinely use various other factors, such as age or type of vehicle, in creating a per-mile price.

    Under Proposition 103, approved by voters two decades ago, California insurance premiums already are based partly on miles driven, but insurers say they have lacked authority to adequately verify motorists' estimates, thus resulting in an honor system that often is abused.

    California's new regulations allow both mileage-estimated and mileage-verified plans in an attempt to encourage options.

    Poizner and other supporters tout pay-as-you-drive as a way to accurately tie insurance cost to accident risk, and to provide an incentive to walk, bike or use public transportation.

    "Economic conditions are tough," Poizner said. "The opportunity to actually get a big discount on your auto insurance by driving less? ... It will be very attractive."

    Pay-as-you-drive policies, available in various forms in numerous states, is supported conceptually by groups ranging from the California Air Resources Board to the Environmental Defense Fund.

    Ken McEldowney of Consumer Action predicted that per-mile policies would succeed in altering habits.

    "They may cut back in terms of leisure driving," he said of buyers. "They may combine trips to the store in a way they weren't doing before."

    Pay-as-you-drive will not be for everyone, however. The push to cut rates for low-mileage drivers could spark a move to raise rates for high-mileage drivers based on more accurate risk assessment, though no such increase currently is under consideration.

    Pedestrians in downtown Sacramento last week had mixed feelings.

    "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."

    But Armando Martinez, 52, who was visiting Sacramento from Oklahoma, said he owns three cars and could benefit from per-mile policies.

    "I wouldn't have to worry about paying insurance for the ones that are just sitting there," he said.

    A pay-as-you-drive study last year by the Brookings Institution, a public policy research group, concluded that driving would drop by 8 percent nationwide – and oil consumption by 4 percent – if all motorists paid for car insurance by the mile.

    Two-thirds of U.S. households would save money – averaging $270 per car – under pay-as-you-drive policies, which routinely would be adjusted for rural vs. urban driving, the Brookings study concluded.