Oregon is one of the few states so far in which pay-as-you-drive (PAYD) auto insurance is offered.
Insurers are beginning to offer auto-insurance plans that charge motorists based on the number of miles driven.
Some of these ‘pay-as-you’ drive programs, which involve tracking the vehicle with an on-board monitoring device, would also charge drivers based on how abruptly they brake and accelerate.
Two large insurers currently offer pay-as-you-drive discounts. Progressive's MyRate program uses a device plugged into the vehicle’s diagnostic port that tracks the number of miles driven, the time of day, and how aggressively the vehicle is driven. Every six months the driver sends the device to Progressive, which then calculates the insurance rate. The company says that, for each renewal term, a driver could see a savings of up to 40 percent based on his or her driving behavior. Unsafe drivers would pay more, says Progressive.
People who drive more and/or have a poor driving record would likely avoid PAYD insurance.
The insurer GMAC has partnered with OnStar to create a Low-Mileage Discount program. Under this program, only the odometer readings are sent to the insurer, which calculates rates based on miles driven.
A report by the Brookings Institution’s Hamilton Project estimated that if all motorists paid for accident insurance per mile driven rather than in a lump sum, driving would decline by 8 percent nationwide. Such a reduction, say researchers Jason Bordoff and Pascal Noel, would net society the equivalent of about $50 billion to $60 billion a year by reducing driving-related harms, and would reduce carbon dioxide emissions by 2 percent and oil consumption by about 4 percent.
In their report--actually a discussion paper, the authors claim that paying for auto insurance by the mile will motivate folks to drive less. Besides the benefits listed above, this would also reduce the number of vehicles on the road, lowering congestion and accident rates. For Oregon, they estimate the average PAYD rate would be 6.9 cents per mile, while in California it would be $6.8 cents per mile. Currently, the average American is paying 6.6 cents per mile in collision and liability premiums. For a vehicle getting 20 miles per gallon, the average American is essentially paying an extra $1.32 per gallon for auto insurance.
The assumption--based upon data from the UK (where the driving habits are very different), is that lower income drivers would see the most benefit because they tend to drive less. Thus, the authors guestimate that the typical American earning less than $52,500 per year would see his or her auto insurance rates decline. And if the rates do adversely impact low income drivers, their solution is to address this through progressive tax reform. Right.
The authors figure it would take government subsidies to motivate the transition...but otherwise they tend to avoid the subject of what would motivate the average insurance company to convert to a system which generates less revenue. They also figure it would simplify things if all vehicles were subject to regular, verifiable odometer audits. As you can probably guess, the authors figure the privacy issues are manageable, and that those who have concerns can simply choose other insurance...though they'd prefer that all auto insurance be PAYD.
FYI, fifteen percent of drivers in Israel have PAYD auto insurance.
I think this damages the nervous system of people as wireless device in a car near the person who drives the car will effect the human nervous system a lot. We need to be careful when arranging this system.
Posted by: Dent Removal | July 31, 2008 at 08:51