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Pay-as-you-Drive Creeps Ahead in California

The Sacramento Bee notes the state’s insurance commissioner is drafting regulations.

A pay-as-you-drive study last year by the Brookings Institution, a public policy research group, concluded that driving would drop by 8 percent nationwide – and oil consumption by 4 percent – if all motorists paid for car insurance by the mile.

Two-thirds of U.S. households would save money – averaging $270 per car – under pay-as-you-drive policies, which routinely would be adjusted for rural vs. urban driving, the Brookings study concluded.

If some cars are being charged less, presumably some will be charged more, based on more miles driven, but that issue hasn’t been discussed as much. But bringing any granularity to the incredibly inexact pricing regiment of auto insurance is welcome.

(thanks Robert)

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This entry was posted on Wednesday, November 4th, 2009 at 9:07 am and is filed under Cars, Etc.. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

4 Responses to “Pay-as-you-Drive Creeps Ahead in California”

  1. Vinny Says:
    November 4th, 2009 at 12:45 pm

    This ought to make for some fun underwriting calculations. Fewer miles driven will reduce overall collision exposure. However, drivers who spend less time behind the wheel have a higher crash rate per mile driven. I am sure when this is all balanced out there will be fewer collisions and the roads will be slightly safer.

    I would love to see a summary at the bottom of my insurance bill stating “You drove 317 miles last month. That saves you $22.50!” Showing how miles relate to the true costs of car ownership will help some people manage their money smarter. If Michael and Linda in the article don’t want to be billed by the mile then let them pay the premium for the unlimited plan.

  2. Scott Says:
    November 4th, 2009 at 3:41 pm

    Did anyone else think this had to do with an election or something and read the headline as “[The] Pay-as-you-Drive Creeps [Are] Ahead in California”?

  3. Paul Johnson Says:
    November 4th, 2009 at 3:44 pm

    A good reason why California shouldn’t be allowed to influence the rest of the country.

  4. nick Says:
    November 4th, 2009 at 8:41 pm

    There really seems to be a paradigm shift underway in the way that driving is viewed. For three generations we have put into place policies that not only subsidize those who drive a lot at the expense of those who drive a little, but also actively conceal from drivers the true cost of driving. The current reality is that the incremental cost of driving a car compared to the fixed costs are so low that once you buy a car it makes sense (financially) to drive that car as much as possible. While that makes sense on an individual level, on a societal level the costs are tremendous. Only now are governments starting to react.

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How We Drive is the companion blog to Tom Vanderbilt’s New York Times bestselling book, Traffic: Why We Drive the Way We Do (and What It Says About Us), published by Alfred A. Knopf in the U.S. and Canada, Penguin in the U.K, and in languages other than English by a number of other fine publishers worldwide.

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