In an effort to both develop a fairer auto insurance pricing structure for consumers and encourage people to drive less, lawmakers in California are considering legislation that would make mileage based car insurance a reality in that state. If the bill passes, it could dramatically change the way auto insurance companies do business and the way consumers drive.
Mileage based auto insurance is insurance that you pay for based on the number of miles you drive. If your car rarely leaves the driveway, your auto insurance rates would be low, while if you drive long distances frequently, your insurance would be more expensive. Insurance companies could approach this in a few different ways. You could purchase a policy based on your predicted number of miles driven, or you could â€œsettle upâ€ for miles you actually have driven at regular intervals. You would be required to have regular mileage check-ups, either at an insurance company office, a garage certified by the insurance company or via a GPS system installed in your car.
Proponents of the plan think that the benefits are twofold. First, it levels the playing field a little bit in terms of auto insurance rates. People who rarely drive will no longer have to pay the same monthly premium as people who drive long distances daily. Second, mileage based auto insurance could encourage people to drive less, which is good for the environment. If people knew their insurance was going up with every mile they drove, they might think twice about some of the trips they make and think more about using public transportation.
Mileage based insurance opponents are concerned about the way insurance companies plan to track mileage. Installing a GPS tracker in a car invades the privacy of the driver. Even if the stated purpose is solely to track the mileage, once the GPS is in the car, the ability to use it for other purposes is there. There is also concern that mileage based insurance puts an undue burden on those who have no choice but to travel long distances every day, such as those with long work commutes.
The bill proposed in California would not make mileage based insurance mandatory. It would simply open the door for auto insurance companies to offer it as an option to their customers. Oregon and Georgia are considering similar ideas, and many other states are expected to follow suit. The mileage based insurance alternative has had some success in the UK, but it has yet to be tried in the US. However the legislation pans out, consumers will remain in the driver’s seat when it comes to choosing the right California auto insurance policy for them.