Pay As You Drive (PAYD) Insurance
- 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
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.