SACRAMENTO — California drivers could be offered a new -- and often cheaper -- kind of car insurance next year under a voluntary pay-as-you-drive plan proposed Wednesday by Insurance Commissioner Steve Poizner.
His plan would base annual rates partly on the exact number of miles driven and would allow people to pay less if they drive less. Poizner issued proposed regulations spelling out the plan, and the state's insurers Wednesday were enthusiastic about the idea but wanted to see more details.
Two out of three households in the state could save an average of $276 per vehicle, and lower-income people, who generally use their cars less than the middle class or the wealthy, might save even more, said a July study by the Brookings Institution in Washington. However, some high-mileage drivers might see their rates increase by opting for pay as you drive, the Brookings report said.
Putting a pay-as-you-drive system in place would give motorists a reason to drive less and thus purchase less gasoline, proponents argue.
Environmentalists are big supporters of the idea and predict the scheme would cut emissions of greenhouse gases that contribute to global warming.
If just a third of California's licensed motorists switched to the plan, it would be the equivalent of taking 10 million automobiles off the road, Assemblyman Jared Huffman (D-San Rafael) said. Huffman's sponsorship of a pay-as-you-drive bill in the Legislature prompted Poizner to come up with his regulations.
"I am thrilled to pave the way for California drivers to obtain insurance that is more environmentally friendly and more accurately reflects driving habits," Poizner said at a Sacramento news conference. "As a strong advocate of healthy market competition and a healthy environment, I am especially pleased to encourage this kind of innovation and additional options for consumers."
Most major insurance companies said they were interested in offering pay-as-you-drive pricing to their customers.
Insurers say that such a plan would give them a more accurate way to calculate premiums based on customers' having fewer accidents and claims for property damage and medical bills.
Currently, rates are based partially on drivers' own and often erroneous estimates of how much they drive as well as their safety records and number of years behind the wheel.
