Los Angeles, CA – (WiredPRNews.com) The first two pay-as-you-drive auto insurance plans that will be offered in California were approved on Thursday and should be made available to drivers in 2011. The announcement comes two years after Insurance Commissioner Steve Poizner began developing regulations for such programs.
Pay-as-you-drive plans, through which policyholders can receive discounts on premiums for cutting back on the amount of miles they drive annually, have been made available in a number of states, but these will be the first such programs introduced in the Golden State.
The total amount of miles driven annually helps companies determine how much car insurance will cost for Californians. This is done not only because California insurers want to; it’s because they have to. Proposition 103 dictates that insurers in the state must use the annual total of miles driven as one of the three primary rating factors when assessing risk. The logic behind this is that the more time a driver spends on the road, the more chances he or she has to get into an accident that may result in a claim.
One of the companies that will be initiating the program in February 2011 estimates that it could amount to approximately $31 million in savings for its policyholders.
But the benefits of such programs have been said to extend far beyond premium reductions.
A 2008 Brookings Institution study noted that, if such programs result in drivers’ reducing their time on the road, they could lead to billions of dollars in savings, lower oil consumption and a reduction of carbon emissions.
To learn more about the factors that affect insurance rates, readers can go to http://www.onlineautoinsurance.com/quotes/how-much-car-insurance-costs.htm where visitors will also be able to shop for affordable coverage by using the free quote-comparison generator.
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