California about to test pay-by-the-mile car insurance

[Newsjock]

Source: Streetsblog

The California Department of Insurance has approved a pay-as-you-drive insurance program encouraged by environmental advocates and transportation planners because it provides an incentive to drive less by reducing premiums for low-mileage drivers. Widespread adoption of similar insurance policies could reduce driving in the U.S. by as much as eight percent, according to a Brookings Institution study.

... Starting in late February, State Farm will offer an initial 5 percent discount for the first policy term to drivers who opt-in to the Drive Safe and Save program and agree to self-report their odometer readings at the beginning and end of each policy period. Policy holders with an active On Star system, which comes with many vehicles made by General Motors, can agree to allow State Farm to access their mileage data automatically.

Customers who opt-in under the program will have their policies adjusted based on 500-mile segments up to 19,000 miles per year. For those who rarely drive, State Farm expects their premiums will be reduced by up to 45 percent. Assuming State Farm achieves its target of convincing one quarter of its policy holders to switch to pay-as-you-drive, the resulting savings would be $31 million a year.

... Another potential benefit of the program is the gradual public acceptance of reporting vehicle miles traveled (VMT). For Robert Atkinson, President of the Information Technology and Innovation Foundation and former chair of the National Commission on Surface Transportation Infrastructure Financing at the U.S. Department of Transportation, this could make it easier to transition to a distance-based VMT tax to pay for roads.

Read more: http://sf.streetsblog.org/2010/12/17/californias-pay-as-you-drive-insurance-program-could-reduce-driving

[Creative]

1. I like the idea. It's sort of like the gas tax. The more you drive the more you pay.

[Newsjock]

2. Except if you don't make enough money to live close to your job

And if public transportation is either nonexistent or poorly timed with your work schedule. (Overnight stockers at Safeway, anyone?)

The rich can afford this scheme; many of the poor cannot.

[SharonAnn]

4. Well, who do you think wanted this implemented?

[Creative]

6. I don't see it as a scheme at all. It's simple logic--A is A. The more you drive, the more you pay.

The rich don't get any special breaks with the gas tax either. Since they tend to drive vehicles that consume more gas, they pay higher gas taxes too.

[AlabamaLibrul]

12. If we assume that the poor a) don't have access to public transit and b) don't have the luxury

of living very close to their jobs, then obviously the cost of this insurance disproportionately effects the poor.

That's why the gas tax and this scheme are regressive.

[Creative]

22. The testing and implementation of policies and programs should not

be based on what is good or not good for the poor. For seldom is anything good for the poor.

First, we must experiment and learn what works best for the rest of us; subsequently, we can make adjustments that deal with the poor.

[Initech]

14. I'm heavily opposed to this idea.

I'm a courier and I barely make over $12 / hour. Do you think my job is going to compensate me for this? Fuck no!

[Creative]

23. In your case, the cost of operating your vehicle is a business expense.

Thus, I assume all of these costs are tax deductible.

[Ruby the Liberal]

3. If you don't drive much, you can contact your insurance company today to request

'pleasure' status. Since I walk to work, GEICO dropped my premium by a bunch. I just have to report odometer readings every 6 months and can't go over 7,000 miles a year. Last year was only 4,500 miles, so doable.

[Speck Tater]

7. I tried that with my old insurance company BUT...

they said it only applied if I drove on one weekend a month. That wouldn't work for me because the only time I drove last month (for example) was to a dentist appointment, and it's hard to get dentist appointments on the weekends. So I switched companies.

[Gabi Hayes]

9. do you have a brother named Richard?

http://www.rhapsody.com/player?type=undefined&id=tra.12459230&remote=undefined&page=undefined&pageregion=undefined&guid=undefined&from=undefined&__pcode=

or

http://www.rhapsody.com/-search?query=dictator%20in%20a%20polo%20shirt&searchtype=RhapKeyword

then hit "play"

[Gabi Hayes]

8. THANK YOU! I have Geico. My 2005 car (driven for 5 1/2 years)

has 37K miles on it

I'm calling them tonight to see what kind of dis I can get

[Ruby the Liberal]

10. My 2007 had just under 25,000

Now that I think of it, it may have been 'recreational use' that they called it.

Good luck and don't take no for an answer!

[Gabi Hayes]

17. will do...did you notice my license plate?

closely, now

[gratuitous]

5. Color me suspicious

An insurance company advocating for a program that could reduce someone's premiums by up to 45 percent? There is much, much more here than meets the eye. And there it is: "gradual public acceptance of reporting vehicle miles traveled." And what else will the public gradually come to accept as a condition for driving a car?

Why couldn't we just have a single payer insurance system with premiums collected at the gas pump? You already choose your grade of gasoline; one more push of a button, and the tax for your particular make, model and year of car is calculated and added to the price per gallon. You pay when you fuel up, so lower mileage drivers would automatically pay lower premiums.

For some reason I can't quite put my finger on, I don't trust insurance companies to have the best interests of the general public at heart.

[Hassin Bin Sober]

11. I'm with you.

All the vendors I do business with gave us a "bonus" for entering data - A.K.A. Doing their work. That was then and this is now - Now we pay a "penalty" for not entering the data. And prices haven't come down.

[immoderate]

13. System long in use in South Africa (I have a friend from there.)

Insurance is added to gas prices. Bigger car, more miles, more premium. Savings in administrative costs easily cover any loose ends.

--imm

[hunter]

19. California voted against that years ago.

I thought it was a good idea. The last accident I was in was caused by an uninsured driver who was driving uninsured because he had nothing. After food, shelter, and maintaining an $800 car, lots of people don't have anything left to buy insurance. If our society expects people to drive to work then wages ought to be high enough that they can comfortably afford insurance. By increasing the gas tax and the minimum wage simultaneously and you might avoid making the gas tax too hideously regressive.

Then again, if I had my way I'd pretty much tax most automobile traffic out of existence in favor of denser cities with superb public transportation systems.

[tech9413]

15. The whole idea is a disincentive toward higher mpg

It's a reaction to higher mpg requirements to counter the lower gas tax income. If people drive less or have higher mpg, they pay less to support road maintenance. That sounds fair right? By the same token lower vehicle gross weight should dictate lower insurance rates. The same should apply to vehicle registration.

For me that would be aces! I drive a 98 Civic with about 48K. Most of the miles were put on in the first few years. These days I drive less than 2.5K a year. I'd likely pay next to nothing. That would be fine by me but some poor working stiff that has to drive 100 mi or more to get to work and back each day would get nailed (did that for years and I'm sure those on the coasts know the feeling). Companies that do on-site service would be hurt (I did that for all of my working life). Delivery companies, same thing.

That line of thinking feels real good because it reflects a pay as you go attitude. The problem is I think, without empirical data, it would lead to a severe decrease in funds to support the infrastructure. That might be fine for a few years but face it. The condition of our roads, bridges, and general maintenance is not that good right now. Cut the funding to support that infrastructure and within a decade or so we'll need oxcarts and a mule to get from here to there.

Then consider those that don't drive or own their own vehicle. The rates for public transport are already high and in most areas it affects those with the lowest incomes. How do you apply it to public transport?

It may be fair to apply a pay as you go theory but you have to consider the public good of providing essential funding on an equal basis to all and assure maintenance and improvement of that common infrastructure. Even if you don't have a vehicle and are home-bound, you receive a benefit from its existence.

I know I got off the track a bit, but I think the concept translates to supporting infrastructure. I think we all need to contribute on an equal basis as a starting point to support the basic function of the service. Those that have higher usage or higher risk should contribute more relative to the norm. The norm should be enough to maintain service and those outside the norm should be bankrolled to pay for the unexpected.

This is just my idea and not completely fleshed out. Sorry for the less than timely and verbose response but it takes me time to type and I always proof my thoughts and language several times to not be thought a complete idiot. (I still have a long way to go!)

[Ruby the Liberal]

16. One challenge I would have with this

Insurance is based on risk factors, not taxes. The less miles driven, the less risk. Hours of the day count too - work 2nd or 3rd shift and drive to work? Premiums will be lower than 8-5 prime time rush hour.

Odd that in that most accidents happen within 4 miles of home (going on memory on that one - may be different today).

[Travis_0004]

18. I think the overnight time is considered higher risk

Progressive has offered me a chance to plug something into my OBDII sensor on my car, and it records my driving habbits and what time I drive. It list late nigh as high risk. I'm still debating on doing it, but due to my job, I am out late at night a lot in December, so if I do it, I'm going to wait until Feburary, when we are slower, and I drive less, and less often at night.

[dsc]

20. that is because you spend way more time within 4 miles of your home

even when driving. You have to drive the within 4 miles to get to the without 4 miles. Thus you spend more time within 4 miles.

[RegieRocker]

21. What comes next? What area you're driving in.

Knowing where you go and for how long in that area?