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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
By Keeir on 11/10/2009 6:47:16 PM , Rating: 2
Look, the fact is that CA and NY pay significantly more to the feds for the benefit of the nation than they get back, so anyone complaining about other states giving money to socialist CA should STFU. Your cost of living argument is a red herring.

Actually no, its not.

The fallacy is in measuring services/or benifit in Dollar amounts spent in a psuedo-geographical boundry.

So, when the Federal government gives a Nebraska Farmer a subsidy to ensure both cheap food prices AND a viable domestic farming industry, don't people in California and other blue states benefit with lower food prices? Much of the Nation's RD Science funds are spent in NM because of its remote location and lower cost of living (meaning lower over cost) than California. Doesn't California benefit from these programs as well? There is no way we can directly calculate the benefit in Dollars California receives from Federal Spending.

The distrabution of Federal Funds is what was intended during the setup of the Federal government. Rich or highly populated states can't wag the dog to ensure a higher than warranted Federal Spending in thier particular states. Ultimately, the Federal Government spending 1 to 1 dollar in California would be a negative for -California-.

I'm just saying people should stop making BS claims that CA "needs money from other states to operate". They're like kids with an allowance complaining that their mom asked them to buy some makeup for her with "their" money.

Hmmm.. Federal Dollars Collected to Support the Federal Good as decided by the House of Repersentatives, which California gets a larger influence in due to its larger size, are not equal to hand-outs to meet State Promised Goods and Services.

California, New York, and many other "Blue States" so far have been the primary beneficiaries of the TARP funds. So its not like they never receive more than thier fair share of direct Federal Spending.

California wanted a Auto Style Bailout. 'Give us money so we can sustain for a year the poor contract we wrote.' Notice that most people hate the Auto bailout's as well?

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