Calif. to tie auto insurance to miles driven

August 27, 2008 6:54:27 PM PDT
There is a new way to calculate how much you should pay to insure your car. It is something proponents are calling green auto insurance.

If you drive more, you should pay more -- drive less and save on your insurance bill. It is a simple idea that is just now being put into effect.

The more miles you drive, the more chance for an accident. So why aren't you billed by the miles driven? Soon, you could be.

"Right now the rules don't even permit insurance companies to offer discounts if you drive less. That's a constraint on the system that doesn't make sense. It hurts the environment, it hurts the consumers," says Insurance Commissioner Steve Poizner.

Poizner has announced new rules allowing insurers to charge by the mile.

Environmentalists love the idea, but consumer activists want to make sure if devices are installed on cars to measure mileage, that is all they measure -- not where the car is driven, or how.

"We have a huge problem with requiring Californians to pay for their privacy or pay higher insurance rates if they refuse," says Poizner.

Poizner says he will not allow anything but miles driven to be measured.

"This collecting of other kinds of data that track exact location of where you are driving, I'm just telling you, I am not going to permit that. It will be strictly prohibited. In my view, that is a privacy violation and we are just not going to go there," says Poizner.

The rules are still being written and it will take about a year before they are implemented. Although miles will be factored into the equation, your insurance rates will still be based mainly on your driving record.

So how much could this save you? It is just speculation now, but it is believed a good driver with a short commute could save $250 a year.


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