The miles driven will be calculated either through sensors or authorized odometer readings. Proponents are saying people would travel less or use other forms of transportation if they were paying insurance based on miles driven. I could see how a good portion of drivers would use other transportation or cut down their driving so as to pay less insurance premiums. The less you drive the less of a risk for insurance companies as well.
A study was conducted by Georgia Institute of Technology that found “pay-as-you-drive insurance could legally be offered in 27 of 43 states surveyed.” In Maryland there has already been pay-as-you-drive legislation put forth while in 2001 Texas passed the first law to formally allow insurers to offer the insurance. Unfortunately not one insurer has offered the miles driven insurance.
Endorsement of this type of insurance by the insurance industry has been scarce to say the least. A Spokesperson for State Farm Insurance, Dick Luedke, said “insurers are concerned that miles driven could be overemphasized at the expense of other factors in determining premium levels.” Luedke’s statement seems to be incorrect or at least uninformed if all pertinent factors are incorporated into the per mile price. Of course as consumers get wind of this insurance and start demanding it insurers will have to start offering it.
Other countries are taking the lead with pay-as-you-drive insurance as insurers in England and Japan have seen demand for small recorders that capture mileage data go from 5,000 in 2003 to current orders of 35,000. It remains to be seen if interest will catch on here in the states.
Does this type of auto insurance appeal to you?
When you are sitting at one office all day long, have benefits through your employment, pension plans and other incentives it is easy to say that this type of insurance would help the environment, decrease congestions on the roads, make roads safer etc. But when you are like so many other people in this country, who are self-employed, have no benefits, do not make a lot (I can’t even afford health insurance), and have to travel for business every day from point A to B, to C, and so on to Z, the idea of being punished with the higher rate does not appeal at all. From my experience those of us who HAVE to travel a lot ALREADY plan our trips (after being in a car for a long part of the day I would never go to the store on a separate trip – I would plan it so that everything will be done at one time). So I guess there is nothing new in this proposal – those who carry the burden now are going to have even more weight put on their shoulders, and insurance industry is going once again make good money.
Elena
Posted by: Anonymous | January 31, 2007 10:39 AM | Permalink to Comment