Listen up, California drivers – there are big changes coming to auto insurance. Comparison shopping is a smart thing to be doing now, because you could wind up saving some big bucks on your premiums.
New Options for Motorists
Thanks to new changes in state insurance regulations, California auto insurance companies can now offer coverage that is based on the number of miles a motorist actually drives. The new pricing, known as “Pay-As-You-Drive” is not a new concept. It was first pioneered by the Texas insurer MileMeter starting in 2008, and has been slow to catch on. However, in a state that has more cars, more drivers, more air pollution and more congestion than any other, this new pricing structure will not only enable Californians to get the best insurance rates (since they won’t be paying insurance for their vehicles while they are sitting in the garage).
If history teaches us anything else (especially recent history), it’s that economic incentives work to change behavior when virtually nothing else does. For instance, mandatory gasoline rationing – instituted during the Second World War as well as the late 1970s – did very little to reduce driving. It says a great deal about America’s addiction to their automobiles that while Americans were more than happy to give up meat, grow their own vegetables, forgo sugar and make other sacrifices for the troops during World War II, fraud when it came to gasoline rationing was rampant. Such cheating also undermined the ill-fated “odd-even” rationing that took place in the Golden State during the winter of 1979-80.
Today, however, Californians who compare car insurance quotes based on their actual mileage are going to find that by driving less, they are going to save money – and this means less traffic, less congestion, fewer accidents and lower pollution levels.
Who’s Doing It and How
As of this writing, only two of the largest California insurers – State Farm and the Automobile Club of California – are offering this type of insurance pricing. With the former, customers state their odometer readings at the time they buy their policies. Drivers with newer cars equipped with OnStar and similar technology will then provide odometer readings at regular intervals. Drivers with older cars can have their mileage verified through smog inspection records.
According to State Farm, a motorist who drives his/her vehicle no more than 2,000 miles a year could save up to 45% every year.
As more and more California insurers begin offering this type of coverage, it’s a sure bet that California motorists will start to compare car insurance rates more often and more thoroughly.
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