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CA Mileage Based Car Insurance

The state of California has been working on finalizing its plans for pay as you drive auto insurance, and the state insurance commissioner recently released the final regulations for the program for auto insurers in the state. Pay as you drive auto insurance is a relatively new concept which has caught on in certain states, notably in Texas where its implementation has been very successful. The whole concept revolves around a very basic assumption that if you drive less, you are less at risk to get into an accident or come across some other claim situation. The program sets into motion a way for California drivers to pay for the exact number of miles they drive rather than just paying for unlimited driving privileges over a certain limited period of time, which is what most policies provide.

Miles Based Policies Help Many

The simple fact is that many drivers don't need coverage that allows high mileage. In fact, many drivers across the country would take advantage of pay as you go car insurance if it were offered in their home state and would benefit financially from it in the way of lower rates paid out each year. Many industry experts who have studied the development of this idea also say it generates in covered policy holders a tendency to take a look at their driving habits, often leading to further reduced mileage, which saves them money on gas, helps them get more time out of their mileage policies, and cuts down on environmental pollutants.

Other benefits from these pay as you go or miles based auto insurance programs are easy to trace. The cost of an average policy for those who would be likeliest to enroll in this sort of coverage would likely go down, resulting in personal financial savings for covered drivers. But coming up with solutions like this is also a way to get drivers to reduce the number of miles they put on their cars and motivate them to use different means of transportation, carpool more, or simply walk or stay home. This, in turn, reduces the country's need for foreign oil.

Specific Notes on CA Policy

The California pay as you go auto insurance plan has been a work in progress for the past few years. In some respects it was modeled after the system in use in Texas, the first of its kind in the nation. The insurance commissioner's office for the state of California came up with the original guidelines for the auto insurance system, and has since made some adjustments to those guidelines. These are put into place to ensure that all insurers in the state who opt to offer these policies do so in a uniform and compliant manner. The coverage offered by these plans, for example, would have to comply with state auto liability insurance requirements or it would do state motorists no good to buy them.

These plans are aimed primarily at drivers who already do not drive very many miles each year, but they certainly can also be looked at as an enticement for those in the state who drive more to reduce their time spent in the car in order to save money on their premiums. These regulations are based on exact numbers of miles driven and not an estimated number of miles, an important distinction for state motorists who have to keep track of these numbers with due diligence if they take part in the program. There are different verification methods in use, but it is clear that the actual number of miles driven in any vehicle will be an issue with these plans.

Changes Made in Recent Proposal

The California state insurance department has made some adjustments to its proposal in hopes of making its language clearer and passage more likely. Language has been added giving insurers in the state more motivation to offer this option to drivers. This addresses a concern that not all motorists may have access to the plan even if it is passed into law. If all insurers are on board, all drivers can get these policies. Getting them to be on board can be tough when the state is essentially asking insurers to voluntarily take less money for auto insurance policies by offering economically advantageous plans for low miles drivers. Also clarified is the language allowing insurers to continue selling miles estimation policies alongside these new ones, and added instructions for insurers to submit to the department their chosen method for mileage verification.

The California mileage based insurance pay as you go initiative is aimed at motivating drivers in the state to cut down on the miles they drive by giving them direct financial incentive to do so. With the state's environmental woes well documented, this program could help CA.


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