California Coming Closer To Pay-By-The-Mile Car Insurance « THE ...

by BS Report

From the Sacramento Bee (Pics added by the B.S. Report)

By Jim Sanders

Car insurance by the tankful?

Not quite, but California moved a step closer last month to pay-as-you-drive policies that could allow motorists to buy insurance like they do gasoline – a little at a time.

Insurance Commissioner Steve Poizner released regulations permitting and authorizing mileage verification for pay-as-you-drive, without dictating what form such plans must take.

The goal is to use per-mile pricing to entice Californians not to drive so much, thus easing air pollution, relieving traffic congestion and lowering the number of traffic collisions.

A first-of-its-kind plan is MileMeter, available only in Texas, which last year began offering six-month policies with chunks of insured miles ranging from 1,000 to 6,000 miles. When the “tank” runs dry, motorists buy more.

“We absolutely anticipate coming to California,” said Chris Gay, MileMeter founder and chief executive officer.

“Our take is that half the market out there is being overcharged and underserved – and that’s who we aim to address.”

A more conventional pay-as-you-drive plan might offer a yearlong policy based on projected mileage, then upon expiration, provide a refund or rebill the driver based on actual mileage as verified by odometer readings or an electronic device.

Spokesmen for State Farm, Allstate and Progressive insurance companies said they are considering the issue but have not decided whether to offer pay-as-you-drive in California. Such policies routinely use various other factors, such as age or type of vehicle, in creating a per-mile price.

Under Proposition 103, approved by voters two decades ago, California insurance premiums already are based partly on miles driven, but insurers say they have lacked authority to adequately verify motorists’ estimates, thus resulting in an honor system that often is abused.

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