California Thinks About Pay-As-You-Drive Insurance Plans

The State of California is considering a plan to allow pay-as-you-drive car insurance plans. Many hope the move will encourage less driving.

"Two out of three households in the state could save an average of $276 per vehicle, and lower-income people, who generally use their cars less than the middle class or the wealthy, might save even more, said a July study by the Brookings Institution in Washington. However, some high-mileage drivers might see their rates increase by opting for pay as you drive, the Brookings report said.

Putting a pay-as-you-drive system in place would give motorists a reason to drive less and thus purchase less gasoline, proponents argue.

Environmentalists are big supporters of the idea and predict the scheme would cut emissions of greenhouse gases that contribute to global warming.

If just a third of California's licensed motorists switched to the plan, it would be the equivalent of taking 10 million automobiles off the road, Assemblyman Jared Huffman (D-San Rafael) said. Huffman's sponsorship of a pay-as-you-drive bill in the Legislature prompted Poizner to come up with his regulations."

Full Story: California insurance commissioner backs pay-as-you-drive policies


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