Auto insurance companies would charge customers based on the number of miles actually driven, under legislation being considered in California. The plan is designed to cut motoring costs, protect the environment and reduce traffic congestion, according to the Los Angeles Times.
An alliance of insurance companies and environmentalists is touting “pay as you drive” insurance. The option is available from a few insurers in 34 states -- but not California -- as well as Canada, Japan and Europe.
One company, GMAC Insurance Group, says its customers have reduced the premiums they pay by 13 percent to 54 percent. Customers’ mileage is tracked by General Motors Corp.’s OnStar system.
Opponents, mainly privacy advocates, say they fear that insurance companies could begin tracking more than just a driver’s mileage. Privacy advocates worry that companies might install sophisticated GPS devices on cars that would communicate via satellite where and when motorists travel and whether they are speeding or driving recklessly.
One Orlando, Fla. man said he cut his insurance bill by $634 a year for his Cadillac Escalade and his Saab convertible by switching to a GMAC pay-as-you-drive policy.
A study by the Brookings Institution, a Washington think tank, says pay as you drive could create $52 billion in annual benefits from fewer accidents, reduced traffic and pollution, and less reliance on foreign oil.
California Assemblyman Jared Huffman, the author of the California legislation to authorize pay as you drive in California, said the bill rewards people who drive less. Opponents in the legislature say the measure punishes people who live in rural areas. But Huffman's measure is sailing through the legislature with little opposition.
Proponents, including trade groups representing most major insurance companies, say that with gasoline prices near $5 a gallon and likely to head higher, now is the perfect time for pay as you drive.
Huffman’s measure would allow the tracking of mileage but didn’t endorse GPS surveillance. His bill would leave details about how to record mileage to the California Department of Insurance.
State Insurance Commissioner Steve Poizner said he intended to explore techniques that are less invasive than GPS. Those include using electronic monitors that check only odometer readings, accessing maintenance records and authorizing smog inspection stations to report mileage readings.
But one California resident, Yves Didier, was quoted in the Los Angeles Times as saying driving less should be strictly voluntary.
"I personally would not want a device in my vehicle. I feel like it’s another step toward Big Brother watching me," he said.