There is a very interesting proposal currently under debate by California legislators. The, idea, commonly referred to by many as ‘pay-as-you-drive’ insurance, seeks to more accurately monitor a driver’s car usage in order to more accurately bill them. It has been lauded by legislators, environmentalists, and consumer advocates.
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Environmentalists, for one, are in favor of this plan for obvious reasons. If people know that their car insurance bill will be higher if they are on the road more frequently, then they will be incentivized to drive less. Fewer motorists on the road means fewer harmful greenhouse gases being released into the atmosphere. Here in Los Angeles, this could have a significant impact on our nation’s worst smog problem.
Consumer advocates support the plan as well, as car insurance companies in Southern California have long erred on the side of over-billing in order to mitigate risk. That is, these companies are much more likely to bill you at the upper end of their estimate of how much you may drive in one year in order to protect themselves from the risk of having you on the road far more than they expect. With a transmitter relaying your exact mileage, policies will be less cookie-cutter and will more accurately reflect a person’s actual time spent on the road. It should be noted that pay-as-you-drive policies will not be required, so a driver with a long commute may choose to stick with a more conventional policy. It should also be mentioned that these transmitters will not relay a driver’s location, an action that would typically set off alarms with consumer advocates due to the inherent invasion of privacy.
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Finally, an often-overlooked aspect of this debate could be one of the most basic, and that is the impact this could have on personal injury. Along with fewer harmful emissions, fewer drivers on the road should mean fewer accidents, and therefore fewer injuries. Certainly an idea that can be supported by all. For more information on this interesting debate, there is a great article at latimes.com to check out.
See: ‘Pay-as-you-drive auto policies could become option by year’s end’