Insurance policies may depend on miles driven


Even a slight dip in gas prices isn't enough to get some Californians back behind the wheel. Over $4 a gallon is still too high for drivers like Melissa Villarana.

"I stay at home, I surf the Internet, walk around the block. I don't go anywhere," said Villarana.

Villarana's reward may be cheaper car insurance. Insurers now rely on their customers to estimate their mileage with no one really checking. Most overestimate, and therefore pay too much.

The California Department of Insurance may start allowing policies based on actual miles driven, a practice known as "Pay-As-You-Drive."

"That will encourage more people to drive less, and that will have a tremendous positive impact on the environment, traffic safety and on traffic congestion," said California Insurance Commissioner (R) Stephe Poizner.

The insurance industry likes it because fewer miles on the road means fewer accidents and few claims paid out.

While the devil is still in the details, some sort of device would be installed in vehicles so that actual miles driven could be electronically sent to the insurer.

Some consumer groups worry that device would be similar to a GPS which could collect other information, where drivers have been, how badly they're driving and who knows what the insurance companies will do with that data.

But Commissioner Poizner who made his fortune in Silicon Valley says that technology could be made without a tracking feature.

Still, while policies currently on the market will continue to be sold, some drivers don't like being snubbed for living in a city that doesn't have great public transportation.

"It would be punishing people that were driving a lot to work and back, getting their kids to schools, that kind of thing," said frequent driver Stephen Elliott.

But for walkers and bikers, they want a reward for their sacrifice.

"It's a nice little price break for me," said Villarana.

Pay-As-You-Drive policies could be on the market as early as next year.

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