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Pay As You Drive (PAYD) Insurance

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  • Mike Neuman
    You pay more for auto insurance the more miles you drive in a year. Makes perfect sense to me. ... From: EPA Climate Change Govs List
    Message 1 of 1 , Dec 28, 2003
      You pay more for auto insurance the more miles you drive in a year.
      Makes perfect sense to me.

      ----------- Forwarded Message -------------
      From: EPA Climate Change Govs List [mailto:epagovs@...]
      Sent: Friday, November 21, 2003 3:40 PM
      To: CLIMATE-GOVS-L@...
      Subject: Pay-As-You-Drive Gains Momentum

      Pay-As-You-Drive Gains Momentum

      Pay-As-You-Drive (PAYD) automobile insurance, in which premiums for a
      vehicle are based on how much it is driven, offers a way to reduce
      costs to motorists while encouraging them to drive less. A number of
      recent developments suggest that the concept of PAYD is picking up
      momentum in the U.S. and other countries.

      A number of insurers have begun testing the PAYD concept. Progressive
      Auto Insurance, headquartered in Ohio, has tested a PAYD insurance
      option in Texas, and the British insurer Norwich Union currently is
      conducting a pilot test in Great Britain. UK-based software developer
      Carlton Business Systems plans to offer its "Insure per Mile" system
      to British customers starting in February 2004.

      In July 2003, Oregon passed a law creating an incentive program to
      encourage insurance companies to test PAYD insurance premiums. Under
      the law, insurance companies that offer mileage-based or time-based
      rating plans will be given a $100 tax credit for each vehicle
      carrying this type of policy. The law applies only to the tax years
      between 2005 and 2010, and establishes a limit of $1 million on the
      total credits that may be claimed by all of the insurance companies
      during that time. Other states, including Georgia and Texas, also
      have passed laws to enable or encourage insurers to offer PAYD.

      Studies have shown that providing drivers with a financial incentive
      to drive less could result in a 10 percent reduction in annual
      mileage, leading to reduced air pollution, fuel use, and greenhouse
      gas emissions. State and local governments may want to consider PAYD
      insurance as part of a strategy toward attainment of air quality
      standards. EPA has guidance on incorporating voluntary programs into
      a State Implementation Plan (SIP) for air quality.
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