State considers pay-as-you-drive auto insurance

["Richard M. Smith" <rms () computerbytesman com>]

http://www.latimes.com/business/la-fi-carinsure15-2008jul15,0,1541839.story

SACRAMENTO -- An alliance of insurance companies and environmentalists wants
to bring a new kind of mileage-based auto insurance to California and charge
motorists only for the number of miles actually driven.

Called pay as you drive, the option is available from a few insurers in 34
states -- but not California -- as well as Canada, Japan and Europe.

One company, GMAC Insurance Group, says its customers -- whose mileage is
tracked by General Motors Corp.'s OnStar system -- have reduced the premiums
they pay by 13% to 54%. And California drivers could expect to get similar
savings if pay as you drive is approved here.

The system could cut motoring costs, protect the environment and reduce
traffic congestion, boosters say. Opponents, mainly privacy advocates, say
they fear that insurance companies could begin tracking more than just a
driver's mileage. High-mileage drivers could also see higher rates.

People who agree to tie their insurance premiums directly to miles driven
are likely to make the maximum effort to stay out of their cars. That way,
proponents say, they'll save money on gasoline and insurance, the top two
costs of owning a car.

"I'm getting good savings," said Mark Holcomb, a retired federal worker, who
recently moved from San Diego to a suburb of Orlando, Fla. "I'm not driving
so much, so my likelihood of an accident is lower."

Holcomb said he cut his insurance bill by $634 a year for his Cadillac
Escalade and his Saab convertible by switching to a GMAC pay-as-you-drive
policy.

...




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