California approves pay-as-you-go car insurance | ABC30 Fresno

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By ABC30

Saturday, October 17, 2009

SACRAMENTO, CA Car insurance rates are partly based on how many miles drivers tell their insurance company they drive each year.

"I try to under-estimate so hopefully it'll be less," San Bruno driver Martha Hildago said jokingly.

But, new regulations just finalized allow insurance companies more emphasis on how much a person drives with "pay-as-you-drive" policies, which will be cheaper for people who do not drive as much.

The Verified Miles Plan means a driver's insurance agent, an auto shop or a GPS-like device will read their odometer.

The pre-paid plan allows drivers to buy miles in bulk, such as coverage for 25,000 miles, instead of for a period of time.

"If we can put financial incentives in place to encourage drivers in California to drive less, then we can reduce the number of miles driven in California. That will reduce accident rates; it'll reduce insurance rates and it'll help clean up the environment," California Insurance Commissioner /*Steve Poizner*/ said.

The Environmental Defense Fund estimates if 30 percent of Californians participate in pay-as-you-drive coverage, the state could avoid 55 million tons of greenhouse gas emission through 2020.

The new plans are optional and traditional auto insurance will still be available.

"I go to school and live in the same area; my commute is 10 miles, so for me, it'll be phenomenal," Walnut Creek driver Mark Tarshis said.

"I personally drive a lot; I drive from Sacramento to Oakland like 2-3 times a week, so I would hate it," driver Joslyn Lewis said.

If the insurance company opts for a GPS-like reading device, it is not allowed to use other information from it to increase your rates.

But be forewarned, the industry wants to change that.

"Where a car is driven, what time of day a car is driven and how a car is driven are good indicators of whether or not a person will be engaged in an accident," Association of California Insurance Companies spokesperson Sam Sorich said.

Insurance companies must now submit their policy details to the state for approval and could begin selling them by early January.

CA Approved Pay-As-You-Go Car Insurance