California Moves Closer to Pay-as-You-Drive Insurance

California Insurance Commissioner Steve Poizner authorized regulations that allow insurance companies to use mileage verification for pay-as-you-drive policies. Studies have shown that per-mile pricing lures drivers to alter their habits, which then reduces air pollution, congestion and traffic accidents.

These plans can take several forms. In Texas, MileMeter offers six-month policies of 1,000-6,000 miles that drivers refill when their miles run out. The company wants to move into California where it believes motorists are paying too much for insurance.

Other plans being considered by State Farm, Allstate and Progressive might offer a yearlong policy based on a projected mileage. At the end of the year, the insurer would either refund or bill the driver based on how much he or she went over or under the estimate.

The key is verification. Privacy advocates don’t like the idea of installing electronic devices into vehicles to track miles driven, but there are other options. Odometer readings by agents, DMV records or states with smog-check stations could all provide the verification.

Could this lead to a push by insurers to access other information such as when your vehicle is driven or at what speed in order to inflate rates? That’s a less appealing proposition.

Then again, a study by the Brookings Institute confirmed the environmental and economic benefits of by-the-mile insurance pricing. If all of the country’s drivers adopted this type of policy, driving would drop 8% nationwide and oil consumption would fall by 4%. Two-thirds of U.S. households would save an average of $270 per car.


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Daimler’s Car2go project launches in Texas

Austin, Texas – Daimler and the City of Austin, Texas have launched a pilot car-sharing project, Car2go, that will offer a fleet of Smart Fortwo models to members.

Austin has become the official headquarters of Car2go North America LLC, a wholly-owned subsidiary of Daimler.

The first pilot phase involves 200 Smart cars and a defined group of users. At some point in 2010, more cars will be added, and Car2go will be made available to all Austin residents and students.

After a one-time registration process, customers can use the service on the spot by accessing any available vehicle on the street, or by booking in advance through the online reservation process. A significant difference from traditional car-sharing programs is that Car2go offers cars on demand, and customers may use the vehicle for as long as they like, without committing to a specific return time. Users can make one-way trips, and charges are based on time, not distance, with rates starting by the minute. The use of the car includes all city-controlled parking fees, as Car2go is paying a usage fee to the City of Austin in the form of free driving minutes for employees driving on city business; fuel, maintenance, and insurance are also included. The service is currently limited to the greater downtown Austin area, where about 60,000 people work.

Car2go first appeared in October 2008, in the southern German city of Ulm. Austin is the first North American city involved; Daimler plans to eventually have an international rollout. In Ulm, the 200 Smarts in the first pilot are rented 500 to 1,000 times a day, and used by 15,000 customers, representing more than 15 per cent of all citizens in Ulm who possess a driver’s licence. Almost 90 per cent use the service spontaneously, without booking in advance, and for one-way trips.


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