Pay-per-mile car insurance might come to California
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.
