Paying by the mile for auto insurance

SACRAMENTO -- The less California motorists drive, the less they might pay for auto insurance under regulations proposed Wednesday.

State Insurance Commissioner Steve Poizner unveiled a plan that would give drivers the option of paying for their automobile insurance based on the miles they drive.

The regulations are based on a controversial measure proposed by North Bay Assemblyman Jared Huffman, who tried to push the concept through the Legislature earlier this summer.

Supporters say the regulations would provide motorists with an incentive to drive less -- saving fuel and cutting greenhouse gas emissions -- and lower their insurance premiums in the process.

Insurers would be able to start offering the voluntary option to California motorists after the regulations are adopted, no later than the fall of 2009, Poizner said.

"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 in a statement.

Under Proposition 103, which was approved by California voters in 1988, auto insurance rates are based mostly on a motorist's driving record, experience and the number of miles driven annually.

But yearly mileage is based on motorists' estimates, not a verified number. The practice is inaccurate and doesn't reward motorists who are truly driving less, said Huffman, a San Rafael Democrat who represents Marin and southern Sonoma County.

The regulations would let insurance companies give discounts to drivers who voluntarily have their mileage verified to prove they are driving less. To verify mileage, insurers could examine odometer readings, automotive repair records, or install a device that records mileage data.

The regulations would prohibit insurers from using those devices to track motorists' locations or how they drive.

"That would be a blatant privacy violation," Poizner said.

The concept, known as pay-as-you-drive auto insurance, already is an option in 34 states.

Huffman's proposal attracted an unlikely coalition of supporters, including environmentalists, insurance companies and auto makers.

But it drew opposition from some consumer groups, who said it posed privacy risks and could drive up insurance rates.

The bill, AB 2800, was approved by the state Assembly, but Huffman withdrew it from the Senate in favor of Poizner's voluntary regulation.

Nearly two-thirds of California families would save money under the plan, according to the Brookings Institution. The typical family would save $276 annually per vehicle, the Washington, D.C.-based research organization says.

If 30 percent of Californians participate in the voluntary program, California could avoid 55 million tons of CO2 between 2009 and 2020 -- the equivalent of taking 10 million cars off the road, according to estimates by the Environmental Defense Fund.