Pay As You Go Insurance Plan Proposed In California
Drivers could be offered a new and cheap California auto insurance in 2009 if they choose to take part in a voluntary “pay-as-you-drive” plan. Insurance Commissioner Steve Poizner has proposed regulation that would base the annual insurance rates on both on the exact number of miles driven and a “pay less if you drive less” model.
Insurance companies have been mostly supportive of the plan, but said they needed more details of the state’s proposal. The companies agreed that the plan would provide a “more accurate way to calculate insurance premiums based on customers’ having fewer accidents and claims for property damage and medical bills.”
It is estimated that two out of three households could see a reduction of approximately $276 per vehicle, putting cheap California auto insurance rates within reach. The plan would also help lower-income residents, since on average, they use their cars less than higher-income residents.
On the other hand, drivers who log more mileage than average could find themselves paying more under the plan.
Assemblyman Jared Huffman sponsors the proposed regulation, saying that if one third of California drivers took advantage of the plan it would be the environmental equivalent of removing 10 million cars off California roads.
GMAC Insurance Group, which offers car insurance in California as well as other states, reported that the out-of-state drivers who track their mileage using General Motors’ OnStar system have cut the cost of their premiums by 13% to 54%.
Currently, even cheap California auto insurance rates are usually based on the drivers’ own estimates of how much they drive (often estimated in error), as well as their safe driving records and years they have been driving. Pay-as-you-drive insurance policies are now available in 34 U.S. states and in Canada, Japan and Europe.
Related Articles
Filed Under Rates | Leave a Comment
Tagged With General Motors, GMAC Insurance Group, insurance rates, Onstar
Comments
Leave a Reply