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News & ArtsFriday, February 6, 2009
Olympia / Enviro Pay-As-You-Drive Makes Inroads
Posted by Erica C. Barnett on Fri, Feb 6, 2009 at 2:23 PM
Enviros have been lobbying for years for pay-as-you-drive insurance—insurance that charges drivers based on how much they actually use their cars. Now it seems like some legislators may be listening. According to the Seattle Times, state senate leaders are considering legislation that would allow insurance companies to offer insurance by the mile. The program would be strictly voluntary, so if you're one of those people who's fine with having a cell phone but totally weirded out by having a GPS system in your car, you'd be free to keep your old, flat-rate insurance policy. Similar programs are already in effect in nine other states, and as part of a pilot project in King County.
3
mb hoping for the slippery slope, as a 200 mile/year driver.
why are you so paranoid about what your odometer says, anyway?
why are you so paranoid about what your odometer says, anyway?
4
This could actually make sense, with a high deductible (at least in my zip code, where it seems most damage happens to cars while they're at rest).
Any word on the details of the proposed pay structure? I have a suspicion, like pay-as-you-go anything, you could get screwed big time for occasionally traveling long distances (why the hell else own a car you never use?), and that the price-per-mile won't stack up favorably compared to a flat rate.
I don't mean to be totally pessimistic, but if it's legislation that requires this change, and the insurance companies stand to lose money, you can bet they're write in a clever way to make it back, either through flat-rate hikes, or stiff penalties for drivers that agreed to low miles. You don't think they're going to bill you AFTER they check your miles, do you?
For all those folks that have an old pickup in their yard just for occasional errands that've been paying $2,000 a year to insure it all this time - here's hoping it works out somehow anyway.
Any word on the details of the proposed pay structure? I have a suspicion, like pay-as-you-go anything, you could get screwed big time for occasionally traveling long distances (why the hell else own a car you never use?), and that the price-per-mile won't stack up favorably compared to a flat rate.
I don't mean to be totally pessimistic, but if it's legislation that requires this change, and the insurance companies stand to lose money, you can bet they're write in a clever way to make it back, either through flat-rate hikes, or stiff penalties for drivers that agreed to low miles. You don't think they're going to bill you AFTER they check your miles, do you?
For all those folks that have an old pickup in their yard just for occasional errands that've been paying $2,000 a year to insure it all this time - here's hoping it works out somehow anyway.
5
There is no need for a tracker, if that's a big political hurdle. Instead it would be simple enough to pay ahead by mile, just like we currently do by time. You could buy insurance up to a certain odometer reading, and then renew when close to hitting that mileage. If you were caught driving past your paid mileage limit, you could get off your ticket by showing proof of renewal. It's really simple, less expensive than having to manufacture and install thousands of GPS units, and obviates privacy concerns.
6
I'd rather we just did away with private insurance for accidents altogether, slapped a $0.50/gallon tax on gas, and used that to pay for medical care, lost wages, and property damages caused by car accidents.
8
@4,
I guess it depends on the legislation, but I'm imagining something like cellphone usage. You agree to a set number of miles per month, and, if you go above that, you pay through the nose.
I guess it depends on the legislation, but I'm imagining something like cellphone usage. You agree to a set number of miles per month, and, if you go above that, you pay through the nose.
9
Erica: Why would you need some wacko box in your car to get insurance rates based on the mileage? Can't they just read the odometer?
10
@6, 7, $.50/gallon wouldn't be enough to cover my insurance (I drive a PEMCO-insured compact, and have a great credit/driving record). But maybe it would be enough to insure minivans and heavier cars that get fewer miles to the gallon? Or maybe if the $.50/gallon tax was for liability only (which covers injury to another person), and we still had to get collision/comprehensive coverage on our own...
But that whole deal might go right down the drain if electric or otherwise fueled cars make it to the market.
But that whole deal might go right down the drain if electric or otherwise fueled cars make it to the market.
12
A big problem with this is that insurance rates aren't based solely on how much you drive. The risk assessment uses likely driving distance as one factor, others being: age, gender, driving record, credit history, income level, occupation, value/age of the automobile to be licensed, whether you live in an apartment or a house, park on the street or a garage/driveway, crime rate of your neighborhood, etc. It wouldn't simply change linear to the distance traveled. How do they propose to account for that in the rates? I don't see this saving much money for anyone.
You pay insurance for if something happens to your car/occupants, or to cars/occupants that you damage, which can happen whether you drive 1 mile or 12,000 miles per year. If this is about environmental impact, then just raise the damn gas taxes and use the money to improve transit options, invest in car-sharing programs, etc.
You pay insurance for if something happens to your car/occupants, or to cars/occupants that you damage, which can happen whether you drive 1 mile or 12,000 miles per year. If this is about environmental impact, then just raise the damn gas taxes and use the money to improve transit options, invest in car-sharing programs, etc.
13
@12 - pay-as-you-go insurance could take into account all of those factors; you pay five cents a mile because you have good eyesight and aren't a teenage boy, and I pay ten because I have a lead foot and poor reflexes. This wouldn't work, of course, if it was just included with buying gas.
Isn't there already some distance-based element to insurance rates? I recall playing with GEICO's online insurance-quote-machine and finding that if you told it you drove 4000 miles/year, it cost less than 12,000 mi/yr. Or maybe my memory sucks, I dunno.
Isn't there already some distance-based element to insurance rates? I recall playing with GEICO's online insurance-quote-machine and finding that if you told it you drove 4000 miles/year, it cost less than 12,000 mi/yr. Or maybe my memory sucks, I dunno.
14
@13 I think they eventually catch up to you when you get your car emissions checked, they do an odometer reading, so that information trickles its way to the insurance company.
15
@13, you can get a low-mileage discount if you drive just a couple thousand miles per year. But that's a flat rate change, which doesn't make a difference for people who don't drive a whole lot, but who drive more than the little old lady down the street who drives to and from church on Sundays and Thursdays.
16
My idea is for the state to insure everyone, with the cost of the system coming from gas taxes. Everyone pays a flat rate until they have a citation, at which time the citation is an amount sufficient to account for the additional insurance risk of their dangerous behavior. The per gallon fee would be the average per mile cost to insure everyone, including visitors to the state who have accidents while they are here.
The advantages of this system is that no one has to buy insurance, and everyone in the state is insured. Everyone gets reimbursed for costs without having to resort to expensive and time-consuming lawsuits. Insurance companies are put out of business and their workers can get more productive jobs. It also discourages people from driving because the per gallon cost is higher. Unlike other methods you don't need a GPS or an odometer check to enforce this. It encourages people to buy more fuel efficient cars on an individual basis, but the state can always raise the tax rate as cars use less gas over time so that everyone is still covered. If a large enough part of the population switches to all-electric cars then you simply add a surcharge to electrical rates.
The advantages of this system is that no one has to buy insurance, and everyone in the state is insured. Everyone gets reimbursed for costs without having to resort to expensive and time-consuming lawsuits. Insurance companies are put out of business and their workers can get more productive jobs. It also discourages people from driving because the per gallon cost is higher. Unlike other methods you don't need a GPS or an odometer check to enforce this. It encourages people to buy more fuel efficient cars on an individual basis, but the state can always raise the tax rate as cars use less gas over time so that everyone is still covered. If a large enough part of the population switches to all-electric cars then you simply add a surcharge to electrical rates.
18
@16, yeah, that seems like a good idea, especially the part about how people who have more efficient cars pay less.
Until I remember that there's a reason I pay lower insurance rates than a 17-year-old boy or somebody with shitty credit and a bunch of traffic tickets. Having everyone pay the same per-gallon costs will likely increase incidents of speeding and breaking other traffic laws--even if they get the same ticket, they won't have the risk of increased insurance premiums or even getting dropped from their insurance company. As a responsible driver, I don't want to have to subsidize crappy drivers any more than I do already.
Plus, having the state in charge of paying for litigation, and processing reimbursements would be even more horrifying than dealing with the damn insurance companies. At least you can call the Insurance Commissioner on the private companies if they mess up your claim.
Until I remember that there's a reason I pay lower insurance rates than a 17-year-old boy or somebody with shitty credit and a bunch of traffic tickets. Having everyone pay the same per-gallon costs will likely increase incidents of speeding and breaking other traffic laws--even if they get the same ticket, they won't have the risk of increased insurance premiums or even getting dropped from their insurance company. As a responsible driver, I don't want to have to subsidize crappy drivers any more than I do already.
Plus, having the state in charge of paying for litigation, and processing reimbursements would be even more horrifying than dealing with the damn insurance companies. At least you can call the Insurance Commissioner on the private companies if they mess up your claim.
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