San Fransisco, CA (WiredPRNews.com) Last week, California Insurance Commissioner Dave Jones announced that the roster of coverage providers offering pay-as-you-drive (PAYD) policies in the Golden State may soon grow after a third company filed rating proposals to offer such plans.
PAYD is a relatively new form of discount car insurance that provides price breaks for policyholders who put in fewer miles behind the wheel.
California insurers have actually been required for a number of years to take a motorist’s annual mileage into account when deciding how much to charge an individual for coverage (Source: http://www.insurance.ca.gov ). But PAYD regulations allow insurers to require verification of mileage, rather than just a guess from the vehicle owners, and this in turn allows for the adoption of smaller mileage tiers and more precise mileage-based pricing.
One California insurance provider, for instance, has only two mileage groupings for non–PAYD policies. The first mileage category is for those who drive between 0 and 7,500 miles a year, while the second category lumps in all motorists who put in more than 7,500 miles a year. But for PAYD policies, there are 500-mile increments up to the 19,000-mile mark.
A number of state governments have advocated for greater availability and use of PAYD programs in their jurisdictions, since the incentive to drive less could reduce traffic and pollution.
But insurers and policyholders also have another incentive for reducing the overall number of miles driven: the possibility of reducing accident rates. According to 2005 data provided to the Brookings Institution by one insurer for a report on the benefits of PAYD, motorists who put in fewer miles behind the wheel filed bodily injury, property damage and collision claims at a rate that was significantly lower than those in higher mileage categories.
To learn more about PAYD and other ways to scale back auto insurance costs, readers can go to http://www.onlineautoinsurance.com/discounts/ where readers will find informative resource pages as well as a quote-comparison generator that can help consumers locate the best base rates for coverage.