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Pay-per-mile car insurance, is it finally here?
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Is the pay-as-you-drive car insurance plan closer than you think to become a reality in your state?
What a great reward for drivers, if you drive less, you pay less insurance—magnifique! Now why didn’t someone think of this brilliant economic incentive sooner—pay-per-mile policies that only charge insurance for the amount of miles driven. So, if you drive less, your car insurance will be cheaper. Californians are one step closer to living this auto insurance plan dream. Last month, California Insurance Commissioner Steve Poizner released regulations that authorized mileage verification for pay-as-you-drive without dictating what form the plans should take. The pay-per-mile plan is being used to keep Californians from driving so much which would lead to cleaner air, less traffic tie-ups and of course, a decrease in auto accidents.
Last year Texans got a feel for the MileMeter plan which offered six-month policies with insured miles that ranged from 1,000 to 6,000 miles. When the miles run out, drivers would add on more. The founder and chief of MileMeter, Chris Gay, is certain that his plan is Cali-bound. "Our take is that half the market out there is being overcharged and underserved – and that's who we aim to address." Insurance companies like Progressive, State Farm and Allstate are still on the fence as to whether or not they will offer pay-as-you-drive plans in California.
Tree huggers are keeping their fingers crossed that an insurance policy like the pay-as-you-drive plan gets the green light everywhere. They feel that drivers will make fewer unnecessary trips and use alternate modes of transportation like bikes or their feet, so that their car insurance rates can stay low.
The Brookings Institution conducted a study last year and found that the pay-as-you-drive plan would drop driving by 8 percent across the U.S. and oil consumption would take a 4 percent dive. The study also found that under this economic insurance plan, about two-thirds of U.S. households would save big bucks, about $270 per car.
Stay tuned, the plot thickens….
--Car Chick
Would you like to see a pay-as-you-drive insurance plan instituted in your state?
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