State considers revised mileage-based auto insurance

SACRAMENTO
August 4, 2009 12:02am

A revised plan that could lead to basing the cost of auto insurance on the number of miles driven has been released by the state Department of Insurance.

It’s being backed by Insurance Commissioner Steve Poizner.

"Pay as You Drive is a cutting-edge program that will create financial incentives for California motorists to drive less, leading to lower-cost auto insurance, less air pollution and a reduced dependence on foreign oil,” he predicts.

An earlier draft of the idea raised the attention of those who are trying to protect privacy.

The Electronic Frontier Foundation said the regulations would let insurance companies require customers' cars to be outfitted with electronic devices “that could transmit back to the insurance companies all sorts of data about car motion (acceleration, braking, and so forth) as well as driver behavior (steering and seat-belt wearing).”

The revised regulation specifically prohibits using the black boxes to track where the vehicle is driven but does not take into consideration the other points raised by the EFF.

Companies could continue to offer traditional insurance based on estimated mileage. Mr. Poizner contends “pay-as-you-drive” insurance is a way for motorists to pay more accurately for the coverage they need by linking their premium more closely to the number of miles they actually drive.

If a driver elects to purchase a pay-as-you-drive policy, the insurer would verify the driver's miles through a variety of methods, including odometer readings taken by the insurer or its agents or vendors, auto repair dealers, smog check stations, self-reporting by the policyholder or a “technological device” placed in the consumer's vehicle, the Department of Insurance says.

The regulations are anticipated to take effect in the fall, the DOI says.

Comments on this story

Rebecca 8/4/09 9:11 PM
If you are concerned about the privacy implications of these changes, then check out http://www.payasyoudrive.com.au This is an Australian PAYD model which provides all the savings of PAYD insurance without the privacy concerns. This is a viable alternative to the current proposals.