New Rule Would Really Link Miles Driven And Auto Insurance Rates

Twenty years ago, voters took a stand on car insurance. In California, rates can be based only on three factors: a driver’s safety record, miles driven annually and years of driving experience.

The "miles driven" factor is supposed to ensure that the less you drive, the less you pay. But while the law is strong, the current regulation is weak, based on motorists providing estimates of how many miles they expect to drive that year. These estimates are notoriously inaccurate and provide little incentive to drive less.

In this time of high gasoline prices, concerns about greenhouse gas emissions and congested roads, California needs a system where drivers pay car insurance premiums based on actual, verified miles driven.

So Insurance Commissioner Steve Poizner has proposed amendments to the state’s regulations that would provide an option for actual mileage, or pay-as-you-drive coverage. Insurers would be allowed to offer a voluntary option for consumers who want a discount for driving less.

Miles driven would be verified by one of three methods: odometer readings, service records from an auto repair shop or technical devices approved by the commissioner. Poizner has said insurers will be allowed to track only miles driven, not other factors such as when and how individual motorists drive, a concern of consumer groups.

Poizner’s amended regulation, which would take effect in fall 2009, is just another way that individuals and businesses can do their part to reduce carbon emissions. Currently, 28 percent of California’s greenhouse gas emissions come from cars.

Thirty-four states already have the pay-as-you-drive option. With 26 million cars and 330 billion miles driven per year, California, the big kahuna among the states, needs to get on board.