California Insurance Commissioner Steve Poizner on Wednesday announced that he is making a new, green auto insurance option available for California consumers. Pay-as-you-drive auto insurance is a way for motorists to more accurately pay for the coverage they need, by linking their premium more closely with the number of miles they drive. Any incentive like this to get people to drive fewer miles will help reduce greenhouse gases and vehicle accidents, according to Poizner.
The Environmental Defense Fund estimates that if 30% of Californians participate in this voluntary coverage, California could avoid 55 million tons of CO2 between 2009 and 2020, which is the equivalent of taking 10 million cars off the road. This would save 5.5 billion gallons of gasoline and save Californians $40 billion dollars in car-related expenses.
Additionally, the California Air Resources Board has recommended the adoption of pay as you drive as one of the means to meet future climate change gas reduction targets.
Current auto insurance regulations require that rates are based on estimated annual mileage. The new regulations will provide an additional option for actual mileage, or pay-as-you-drive coverage. Poizner's newly-proposed regulations will let insurers offer a voluntary option for consumers who are interested in pay-as-you-drive coverage.
Under the new regulations, consumers could verify mileage by odometer readings, automotive repair records, or a technological device used to collect mileage data. Poizner's regulations explicitly prohibit insurance companies from requiring policyholders to participate in a pay-as-you-drive program. A copy of the regulations is available at www.insurance.ca.gov.
California law has procedures in place to allow for public involvement in adopting new regulations. After these procedures are completed, the regulations will take effect - not later than fall 2009. Insurers will then be able to apply to offer this product in California.
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