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Tuesday, January 30, 2007

Cheap Insurance for Infrequent Drivers?

posted by on January 30 at 11:01 AM

While Greg Nickels has been busy pushing for his new waterfront freeway, King County Executive Ron Sims has been working to secure funding for pay-as-you-drive insurance— an innovative program that charges drivers based on how much they actually use their cars. Pay-as-you-drive is more equitable than traditional one-size-fits-all insurance programs, because it doesn’t penalize people who drive less than the norm (or reward people who drive more than necessary). And because it reflects the true cost of driving more closely (much like, say, buying gas), pay-as-you-drive encourages people to think about their car use and plan trips more carefully. Sims staffer Jim Lopez says the county hopes to secure nearly $6 million in public and private funds toward a pilot project with a single insurance company, with the hope of expanding the program if it’s successful. A poll on Sims’s web site currently shows that 57 percent of respondents say they would drive less if they paid for insurance by the mile.

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And for those of us who walk to work and only use cars to get to evening meetings when we don't have time to take a bus, it would save a LOT!

Posted by Will in Seattle | January 30, 2007 11:06 AM

I second Will. As someone who drives his car about 50 miles a month (I bus to work and walk to the grocery store), I would absolutely love this plan.

Posted by tsm | January 30, 2007 11:11 AM

Did I really say 50 miles a month? Actually, now that I think about it, it's probably under 20 a month, on average.

Posted by tsm | January 30, 2007 11:12 AM

Me too! In the two years I've owned my car I've put about 5,000 miles on it. This would be PERFECT!

Posted by monkey | January 30, 2007 11:15 AM

Many low-income individuals rely on their cars to get to work, school, etc. As long as there is a cap on the insurance so that it doesn't overly penalize the low-income and/or act as a deterrent to someone getting insurance, I'm for it.

Posted by sure | January 30, 2007 11:24 AM

My insurance company offers lower rates for low annual milage (about a $30-$40 discount)- you should ask your insurance company if they offer that already.

Posted by rubyred | January 30, 2007 11:33 AM

Haha, do people think this comes without tradeoffs? Who then would monitor how many miles someone drives? Why, your friendly insurance company, that's who. I mean, you don't expect them to TRUST you, do you?

Do I really have to go into detail about where this leads? Hey, if people want to do it, fine. I think the option should be there. But they need to know just what comes with it.

Posted by ivan | January 30, 2007 12:02 PM

Hurray, Ron! He continues to show that he is one of the few serious and innovative leaders we have. Another example: his work on the viaduct.

Posted by FoS | January 30, 2007 12:34 PM

Gosh, Ivan, you're right -- you might have to tell your insurance company what your odometer reading is! Shocking, isn't it.

Posted by Fnarf | January 30, 2007 12:45 PM

And odometer tampering is already a felony.

Posted by Will in Seattle | January 30, 2007 1:35 PM

See, now you're talking, Erica! Drivers would be encouraged to eschew their cars for transit when applicable... if it saved them $30-50 a month and allowed them to keep their cars. Then they'd find that not using the gas saves them even more, and then the cultural conversion can snowball.

I have never considered buying a car in Seattle, mainly because I didn't want to pay expenses like the $60-100 a month for insurance on a car I'd rarely use. Offering it to me at a discount would, however, make ownership more appealing, and open up my travel possibilities.

Posted by Gomez | January 30, 2007 1:45 PM

This could dovetail in nicely with registration by the mile- which may very well be how we replace the gas tax down the track. Other countries do registration by the mile/km (example- New Zealand) and it works quite well. The gas tax is unsustainable because it assumes a base that is decreasing on a per mile basis; as cars get better gas mileage, less tax money is available on a per mile basis.

Posted by Dave Coffman | January 30, 2007 2:24 PM

But doesn't a per-mile tax penalize high-mileage, low-emissions drivers? A mile driven in your stinky old beater that gets six miles to the gallon is still a mile.

The gas tax may collect less money per mile, but it will never collect less money; the number of miles driven continues to skyrocket, and probably always will.

Posted by Fnarf | January 30, 2007 3:54 PM

FNARF Wrote:
"the number of miles driven continues to skyrocket, and probably always will."

Based on that premise, it does make better sense to tax all moving vehicles (motorized and non-motorized) on their total mileage. I would take it a step further and add vehicle weight to the equation i.e., the more the vehicle weighs and miles driven, the higher the tax. Lighter vehicles have less impact on roadway maintenance. This certainly would add an incentive to offset the additional cost of a tax on gross vehicle weight by providing enhanced mileage capabilities within a lightweight motorized vehicle. Notice, I write mileage capability and not MPG. I do so as I certainly understand automotive technology is rapidly changing, and we should be expecting gasoline powered vehicles to become eventually rare and obsolete....along with the taxes associated with the purchase of gasoline.


Posted by Jensen Interceptor | January 30, 2007 6:55 PM

This could lure some people away from Flexcar. The clear advantage to owning a car and not having to pay a flat rate for insurance is that car sharing programs charge by the hour, so using a car share vehicle to drive somewhere where you will leave it parked for awhile is quite expensive.

I'm surprised, actually, that insurance companies haven't decided to do it on their own; I suppose the logic has been that practically everyone has to drive anyway, so there don't actually exist people who don't have cars who would purchase them if insurance weren't so expensive for driving rarely.

I'm not actually convinced this is a net positive - owning a car when you don't really need one is quite wasteful, and this makes it easier. Although, it would, as ECB mentioned, make some people who already drive do it less. I don't know which effect will be greater.

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