SACRAMENTO, CA — Question: How do environmentalists get motorists to drive less in order to combat global warming? Answer: Team up with the insurance industry and the Legislature to create a pay-as-you-drive insurance policy. And tell drivers they’ll save money if they sign up.

AB2800, by Assemblyman Jared Huffman, D-San Rafael, proposes creating a voluntary policy category in which customers could agree to have their mileage verified through means other than an odometer to receive a potentially, but not guaranteed, lower rate.

Mileage verification is the means through which insurers could offer per-mile coverage. The current verification system, namely odometer readings collected once a year, is not sufficient, say proponents of the bill. There needs to be a provision that allows insurance companies to monitor miles driven more closely.

Perhaps too closely, say opponents.

Critics, led by the Consumer Watchdog Association, are worried about Big Brother’s peering in on consumers’ personal lives. They say the bill is an invitation for insurance companies to equip cars with electronic equipment that could track not only miles driven but also the daily comings and goings of their customers. That information, some fear, could be sold for profit.

"We’re worried about privacy rights. We support the effort to reduce driving, but the devil’s in the details when you see how this bill plays out," said Carmen Balber, spokeswoman for the watchdog group.

Rates using 3 standards

An initiative passed by voters in 1988, Proposition 103, requires the industry to set auto insurance rates using three fairly rigid standards: a motorist’s driving record, miles driven and accident records, in that order.

The new bill would emphasize the importance of miles driven, the second standard, by allowing those who choose to participate in the new program a chance to pay less for their premiums.

The watchdog group thinks the new bill would violate the older initiative, which the group’s founder, Harvey Rosenfeld, wrote.

Members say the new policy category would unfairly discriminate against a certain group of drivers, namely those with older cars.

"You can’t install the tracking technology they want to use into cars made before 1996," said Balber, noting that is about 20 percent of the cars on the road. But that’s not the only problem the watchdog group has with the insurance companies’ so-called little black boxes.

"We’re worried that the new technologies would collect more than just mileage info, but also where you drive and when, which could then be subpoenaed, as is the case with Fastrack devices in divorce cases."

The Electronic Frontier Foundation is worried about that too.

"Since mileage verification can be implemented without tracking devices, (the bill’s) failure to prohibit them appears to be tacit support for the companies’ plans to get such devices into cars," said Lee Tien of the foundation.

California Insurance Commissioner Steve Poizner knows a lot about GPS tracking devices, because he helped create them. His company, Snaptrack, pioneered using GPS in cell phones so emergency responders could find people when they dialed 911.

"GPS technology will not be required at all for pay-as-you-drive insurance, so long as I am commissioner," said Poizner.

Poizner’s term will be up in two years, at which time he is widely expected to seek the Republican nomination for governor.

"They only want to capture miles, brakes and gas data, and I will prohibit the collection of other info such as where motorists are driving," he added.

Electronic data ports have been routinely installed under steering wheels in all cars manufactured since 1996. Consumers who choose to participate in the program would likely plug devices into those data ports, which may then be directed to send signals to insurance companies to capture how many miles people are driving.

"That real-time feedback is important to people so they can see that when they drive less, they save. Once a month, once a week, once a day, that’s all up for debate, but once a year is not frequent enough for people to alter their driving behavior, or to get the idea that when they drive less, they save," said Poizner.

A voluntary choice

"Drivers won’t be forced to install devices," said Sam Sorich, president of the Association of California Insurance Companies. "They can choose to participate or not. And some companies may offer the new policy but choose to use other verification methods for mileage. This bill gives more flexibility to companies so they can be more competitive."

Competition is key for insurance companies, especially with the economy taking a turn for the worse.

"Roughly 88 percent of (a driver’s) transportation costs remain much the same on a monthly basis regardless of how much he or she drives," the bill states, quoting a U.S. Environmental Protection Agency estimate. With fuel prices high, many consumers are looking for ways to cut those rigid costs.

That’s why Republicans are backing the bill, said Assemblyman Roger Niello, R-Sacramento, a car dealer before being elected to the Assembly.

"It’s a bipartisan bill because it has elements that both parties can get behind. For Democrats, it’s air pollution, green incentives, encouraging people to drive less. For Republicans, it’s the fact that it will save consumers money," he said. "It makes good sense to allow insurance companies to choose how to charge people for their services. I don’t think it will actually get people to drive less."

‘No guarantees’

The Environmental Defense Fund, however, cites reports that say otherwise.

"In a pilot test conducted in Texas, motorists’ mileage was reduced dramatically," said spokeswoman Lauren Navarro. "And low-income drivers drive less, so they would have an opportunity to save."

Navarro also cites a study done by the Brookings Institution that showed two-thirds of drivers in California would save an average of $275 per year per car. If the policy was instituted nationwide, the driving rate would decline by 8 percent, the study estimated.

The insurance industry is not so quick to predict the potential savings, however.

"Presumably, there will be a discount to people who are more honest about how much they drive, but there are no guarantees," said Sorich.

The bill its awaiting approval before the Senate Appropriations Committee.