The idea of paying for your insurance by the mile is not new. MileMeter, in Texas, offers pay-as-you-drive (PAYD) rates and California has been using mileage brackets to set insurance rates for years. A new, more precise PAYD system is under discussion in California that would give people who drive less a financial incentive to do keep doing so – and maybe convince people on the fence to find an alternative when possible.

State Insurance Commissioner Steve Poizner recently issued regulations on what PAYD mileage verification plans could look like. It's likely that people with PAYD would think twice when getting behind the wheel and combine trips when possible. The Brookings Institution studied PAYD last year and found that driving would drop by eight percent if all U.S. drivers were under a PAYD system. Also, two-thirds of U.S. households would save an average of $270.

MileMeter is looking to expand to California, and MileMeter founder and CEO Chris Gay told the Sacramento Bee that, "Our take is that half the market out there is being overcharged and underserved – and that's who we aim to address." The bigger insurance companies are looking into PAYD, but have not yet decided to offer it in California. This is an idea that easy to implement and, in lieu of higher gasoline taxes, could have a dramatic impact.

[Source: Sacramento Bee via MMN]
Photo by Wouter Kiel. Licensed under Creative Commons license 2.0.

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