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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RE: California is stupid
11/10/2009 3:20:19 PM
It's nice for you to think that everyone can have a decent job, but that's not how it works. The more productive we become, the less labour is needed for the things we want (i.e. that which we will pay for).
Right now we have low interest rates, stimulus, and people desperate for work (i.e. willing to work for less). There's never been a better time to produce something that society wants. The problem is that the demand just isn't there, and I can't blame society for coming to this realization. Cheap cars are fantastic. Cheap TV's are better than ever. Cheap entertainment is on the internet. Etc, etc. What's the point in spending?
Unemployment isn't going away. Either you eliminate minimum wage to replace automation and reduce productivity per employed person (which is ass-backwards), let poor people starve to death (which will reduce demand and just create more poor people), or live with the fact that social-capitalism is an inevitability in a moral society.
I really don't see what's so bad about it. If you are educated enough to outdo your peers and secure a job, then you get a better lifestyle. If not, then you live on welfare. Just tax enough to make it sustainable.
Rich people are coming to the same realization. That's why they voted for a "socialist" president. That's why productive states are usually blue and not complaining about net outflow. There's already enough encouragement for success, and there's no need to punish lack of it when it's unavoidable for some portion of the population.
RE: California is stupid
11/10/2009 10:03:40 PM
Productive states are normally blue states? Didn't you mean to say bankrupt states?
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