The proposal has raised concerns among privacy advocates who worry that ubiquitous “black boxes” in cars could give insurers information on speed and times of day on the road.
State Insurance Commissioner Steve Poizner yesterday unveiled proposed changes that open the door for pay-as-you-drive insurance. Several states have similar programs.
The program is voluntary for motorists. Poizner expects the rule changes to take effect no later than fall 2009.
“We're looking at it with interest,” said Jeffrey Spring, a spokesman with the Automobile Club of Southern California. “If we can get more accurate information from our policyholders, we can give them more accurate rates.”
Insurance companies now ask California customers to estimate how many miles they drive each year. Under Proposition 103, passed in 1988, the insurance industry must set rates based on a motorist's driving record, miles driven and accidents.
Getting concrete data on mileage could allow insurers to cut rates for customers who drive less than estimated, though there are no guarantees.
Insurers applauded the proposal.
“These regulations offer California drivers the chance to base their insurance rates on their actual driving experience,” said Roger Wildermuth, a spokesman for USAA, a large insurance provider.
Another goal of the program is to give motorists an incentive to drive less. The Brookings Institution estimates that nearly two-thirds of California families would save $276 a year on insurance for each vehicle – in part by spending less time behind the wheel.
Reducing driving would cut greenhouse gases, so environmentalists also support Poizner's move.
A study in Texas by insurer Progressive found that drivers reduced their miles 10 percent in a pay-as-you-drive program.
The sample size in the Texas study was small, so results could be skewed. Still, California has enough transportation alternatives...
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