California Moves Closer to Insurance by the Mile for Drivers
November 10, 2009 10:57 AM
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Watchdog group says new rules give insurance companies all the power
In many states in America, auto insurance is a requirement. This is a good thing since that means any accidents that happen will be sure to have coverage by both drivers. The problem according to some drivers and insurance companies is that drivers that drive more miles and have a higher chance of accidents pay the same amount as drivers who drive significantly less.
California is closer to allowing insurance companies to
sell insurance by the mile
to drivers. This would mean that drivers who drive more would pay more than others would. The Sacramento Bee reports that Insurance Commissioner Steve Poizner has released regulations that will permit and authorizes insurance companies to verify mileage as part of insurance plans based on miles driven.
The ultimate goal of the new insurance plan in California isn’t to save drivers money, but to encourage people to drive less. Less driving will reduce the pollution in California, the number of accidents and ease traffic congestion according to lawmakers. California isn't the only state with insurance plans based on miles driven. Texas has such plans provided by a company called MileMeter that offers six month policies with chunks of mileage ranging from 1,000 miles to 6,000 miles.
MileMeter CEO Chris Gay said, "We absolutely anticipate coming to California." He continued, "Our take is that half the market out there is being overcharged and underserved – and that's who we aim to address."
Conventional mileage based policies would reportedly take an estimate of projected mileage for a year and then refund or bill the driver depending on the actual miles driven. Mileage could be verified in several ways such as at smog check stations, DMV records, and via electronic devices attached to the car.
The fear with mileage based insurance plans is that there will be a push to charge drivers to drive longer distances each year more money in insurance rates. However, there is reportedly no plan to do that at this time.
Two thirds of homes in the country would save about $270 per year per car with mileage based plans according to a study from Brookings. However, Carmen Balber from Consumer Watchdog says that the new policies cater to the insurance industry and don’t require the premiums to reduce when driving does.
"I think the regulations were drafted to guarantee that insurers win, because they were left with all of the choice," Balber said.
Insurance companies are taking the new proposal seriously and Michael Gunning, VP of the Personal Insurance Federation of California said, "Given the competitive nature of the marketplace, I think this is going to be a selling point for companies."
The members of the federation write more than 50% of all auto policies in California. Drivers concerned about their privacy with policies requiring a device be connected to the car need not be concerned according to lawmakers. Regulations prevent the devices from recording location information about the vehicle. However, Balber maintains that the mileage devices give insurance companies a foot in the door to push for the right to collect other data. Future policies could possibly rate drivers higher if they drive in high crime areas frequently.
There are also proposals in the works that would
regulate gas taxes on a per-mile basis
using GPS tracking.
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Keep voting liberal.
11/10/2009 12:06:15 PM
I don't know for the life of me why you people keep voting for liberals. They are all about control. This isn't to help people that drive less pay less, it's to do exactly what the article says, control how you drive. If it costs you more to drive you won't. That's what the liberals want. They are on this whole climate control kick and they believe cars are killing the planet. They want to raise gas to $8 a gallon so that you buy green cars. Cash for Clunkers was about green cars. Except the top trade was an old F-150 for a new F-150. When will you realize that liberals are a party of undelivered promises where they try and tell you they are doing something for you and most of you are completely willing to give up your personal freedoms to get what you are promised. Liberals don't deliver. Cap and Trade, Health Care reform, insurance by the mile. Open your eyes and understand what they are doing. California is a crappy state at this point. It's like a giant hippie commune. They are having a State garage sale to raise revenue for pete's sake. Yet you people see this and say we love it, only do it bigger. Maybe one of you liberals can explain what it is you love about your leadership so much that you are willing to give up everything to have someone else make your decisions and think for you. I just don't understand.
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