California Moves Closer to Insurance by the Mile for Drivers
November 10, 2009 10:57 AM
comment(s) - last by
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.
This article is over a month old, voting and posting comments is disabled
RE: Taking advantage of those that NEED to drive
11/10/2009 3:49:10 PM
Who will get to decide who is a "low mileage driver" vs. a "high mileage driver"?
If you leave it up to the car insurance companies, they'll probably decide that the vast majority of the public are high mileage drivers since that will earn them more money.
"If you look at the last five years, if you look at what major innovations have occurred in computing technology, every single one of them came from AMD. Not a single innovation came from Intel." -- AMD CEO Hector Ruiz in 2007
Proposed 2020 By-the-Mile Road Tax Set to Raise Taxes on Hybrids, EVs
July 2, 2009, 11:18 AM
Tesla’s Elon Musk Says that Fully Autonomous Vehicles Are Still at Least 5 Years Away
September 19, 2014, 9:48 AM
Quick Note: Kia Soul EV Priced from $33,700
September 11, 2014, 5:32 PM
Production Infiniti LE Electric Sedan Leaked in Patent Drawings
September 9, 2014, 10:32 AM
"Decepticon" Driver Triumphs Over Cops in Massachusetts Court
September 5, 2014, 12:07 PM
Tesla Motors Confirms Nevada Gigafactory Deal, Will Receive $1.25B in Tax Breaks
September 4, 2014, 8:24 PM
Mazda Unveils the 2016 MX-5 Miata, Drops 220 Pounds and 3" in Length
September 3, 2014, 8:59 PM
Most Popular Articles
HTC Preps Nexus 9 With Nvidia K1 64-Bit "Denver" SoC, Android L Onboard
September 10, 2014, 10:21 PM
Apple iPhone 6, iPhone 6 Plus Reviews Roll In
September 16, 2014, 9:13 PM
Dell Announces "World's Thinnest" Tablet: The Venue 8 7000 Series
September 11, 2014, 8:51 AM
Samsung Calls Out “Copycat” Apple for 5.5” iPhone 6 Plus in New Ads
September 14, 2014, 11:06 PM
Confirmed: Next Generation of Windows to Be Announced on September 30
September 15, 2014, 4:43 PM
Latest Blog Posts
ISIS Imposes Ban on Teaching Evolution in Iraq
Sep 17, 2014, 5:22 PM
Space Terrorism is a Looming Threat For the United States
Apr 23, 2014, 7:47 PM
Facebook Aims to Provide Internet to "Every Person in the World" with Drones, Satellites
Apr 1, 2014, 10:20 AM
Retail Mobile Sites Experience Outages in Light of Simplexity's Bankruptcy
Mar 14, 2014, 8:48 AM
Tesla vs. BMW: Who Has the Safer EV?
Feb 1, 2014, 2:56 PM
More Blog Posts
Copyright 2014 DailyTech LLC. -
Terms, Conditions & Privacy Information