Pay-By-the-Mile Auto Insurance; Road Tax Based on Miles Driven Determined by a GPS System Fitted in All Vehicles

Dutch to Replace Road Tax with a Kilometer Charge, Based on a GPS System Fitted in All Vehicles

November 17, 2009

Dutch News - People without a working kilometer tax meter in their cars once the system is introduced in 2012 face six months in jail or a fine of up to €18,500, the Telegraaf reports on Tuesday.

People caught fiddling the meter can be jailed for up to four years or fined €74,000, the paper says, quoting the draft legislation.

The draft law says motorists themselves are responsible for the meters, defects must be reported within eight hours, and repairs carried out within three weeks.

The cabinet agreed on Friday to replace road tax with a kilometer charge, based on a GPS system fitted in all vehicles.

The motoring organisation ANWB, which supports the kilometer tax in principle, says ‘alarm bells’ have been ringing about the size of the potential fines.

‘We are going to go through this draft legislation with a fine toothed comb,’ a spokesman told the paper.

Newspaper polls, including DutchNew’s own vote, all show most people are opposed to the introduction of the tax.

California Moves Closer to Pay-By-the-Mile Auto Insurance

November 3, 2009

The Sacramento Bee - Car insurance by the tankful?

Not quite, but California moved a step closer last month to pay-as-you-drive policies that could allow motorists to buy insurance like they do gasoline – a little at a time.

Insurance Commissioner Steve Poizner released regulations permitting and authorizing mileage verification for pay-as-you-drive, without dictating what form such plans must take.

The goal is to use per-mile pricing to entice Californians not to drive so much, thus easing air pollution, relieving traffic congestion and lowering the number of traffic collisions.

A first-of-its-kind plan is MileMeter, available only in Texas, which last year began offering six-month policies with chunks of insured miles ranging from 1,000 to 6,000 miles. When the "tank" runs dry, motorists buy more.

"We absolutely anticipate coming to California," said Chris Gay, MileMeter founder and chief executive officer.

"Our take is that half the market out there is being overcharged and underserved – and that's who we aim to address."

A more conventional pay-as-you-drive plan might offer a yearlong policy based on projected mileage, then upon expiration, provide a refund or rebill the driver based on actual mileage as verified by odometer readings or an electronic device.

Spokesmen for State Farm, Allstate and Progressive insurance companies said they are considering the issue but have not decided whether to offer pay-as-you-drive in California. Such policies routinely use various other factors, such as age or type of vehicle, in creating a per-mile price.

Under Proposition 103, approved by voters two decades ago, California insurance premiums already are based partly on miles driven, but insurers say they have lacked authority to adequately verify motorists' estimates, thus resulting in an honor system that often is abused.

California's new regulations allow both mileage-estimated and mileage-verified plans in an attempt to encourage options.

Poizner and other supporters tout pay-as-you-drive as a way to accurately tie insurance cost to accident risk, and to provide an incentive to walk, bike or use public transportation.

"Economic conditions are tough," Poizner said. "The opportunity to actually get a big discount on your auto insurance by driving less? ... It will be very attractive."

Pay-as-you-drive policies, available in various forms in numerous states, is supported conceptually by groups ranging from the California Air Resources Board to the Environmental Defense Fund.

Ken McEldowney of Consumer Action predicted that per-mile policies would succeed in altering habits.

"They may cut back in terms of leisure driving," he said of buyers. "They may combine trips to the store in a way they weren't doing before."

Pay-as-you-drive will not be for everyone, however. The push to cut rates for low-mileage drivers could spark a move to raise rates for high-mileage drivers based on more accurate risk assessment, though no such increase currently is under consideration...

A pay-as-you-drive study last year by the Brookings Institution, a public policy research group, concluded that driving would drop by 8 percent nationwide – and oil consumption by 4 percent – if all motorists paid for car insurance by the mile.

Two-thirds of U.S. households would save money – averaging $270 per car – under pay-as-you-drive policies, which routinely would be adjusted for rural vs. urban driving, the Brookings study concluded...

The new regulations provide insurers with several options for verifying odometer miles, including using their own agents, smog-check stations, Department of Motor Vehicle records, automotive repair shops, or a technological device that could be placed on a policyholder's vehicle.

Addressing privacy concerns, the regulations prohibit per-mile policies from using technological devices to collect information about the location of a vehicle.

In 16 states, Progressive offers pay-as-you-drive policies that track mileage as well as driving habits, such as the hour and the speed that a vehicle is driven.

Balber contends that California's new regulations will serve as a springboard for insurers to push for the right to collect similar data.

"It's definitely a foot in the door," she said.