Released: August 28, 2008

California pay-as-you-drive policies

Source: Marc Lifsher, L.A. Times (Free Registration)

California drivers could be offered a new—and often cheaper—kind of car insurance next year under a voluntary pay-as-you-drive plan proposed Wednesday by Insurance Commissioner Steve Poizner.

His plan would base annual rates partly on the exact number of miles driven and would allow people to pay less if they drive less. Poizner issued proposed regulations spelling out the plan, and the state’s insurers Wednesday were enthusiastic about the idea but wanted to see more details.

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.

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