Several of the largest auto insurance providers now allow customers to lower their insurance rates based on how they drive. Called “pay as you go” auto insurance plans, the policies are written in the same way as conventional plans, but give people the opportunity to lower their rates by up to 30 percent depending on how, when and where they drive. .
The new option was recently made available and is based on auto insurance options first provided by some auto insurers in California. Allowing motorists to lower their car insurance costs by traveling less encourages them to leave their vehicles at home as much as possible and reduces the chance of accidents.
In California, pay-per-drive insurance plans allow insurers to record actual vehicle mileage and give discounts for driving less, and insurance officials in Massachusetts and New York City support similar measures in their respective places to help. reduce tariffs and provide environmental protection. Benefits. Encouraging motorists to drive less, use carpools and take public transportation by lowering their auto insurance costs by driving less can help reduce traffic congestion and pollution, according to Massachusetts officials.
A potential pay-to-drive insurance plan has been included in the Commonwealth’s “2020 Climate and Clean Energy Plan,” which estimates Massachusetts motorists would drive up to 10 percent less than with regular auto insurance coverage. . Of course, when people drive less, there are also fewer accidents, and a 2005 study by the Brookings Institution indicates that people who drive about 5,000 miles per year were involved in half the number of insurance claims than those who did. they drove 30,000 miles a year.
The California Office of Administrative Law approved the nation’s first regulations for insurance products in 2009, which were proposed by former state insurance commissioner Steve Poizner, who says state residents will be encouraged to drive fewer miles and save money by not paying for insurance. while their vehicles are parked. But pay-for-driving plans have many benefits beyond simply saving money for motorists.
Pay as you go is an innovative way to give California motorists financial rewards for driving less, leading to lower-cost auto insurance, less air pollution and less reliance on foreign oil, according to state officials.
California motorists who choose a pay-as-you-go auto insurance policy have options regarding how the number of miles driven is tracked. Insurers could simply use the odometer, allow customers to report miles driven, or use a device to track actual miles driven, according to state officials. But state regulations don’t allow insurers to use a “technological device” to monitor where people drive.
In most cases, insurers obtain permission to electronically monitor vehicle usage either by downloading information to the vehicle’s electronic control unit or through monitoring programs such as OnStar. Based on the results, motorists can save up to 30 percent on their insurance rates, but their rates will never increase based on the results. About a 15 percent rate reduction is the norm so far.