NU Online News Service, July 8, 3:20 p.m. EDT

The Automobile Club of Southern California has submitted an application to become the second insurer to offer California's pay-as-you-drive program.

Under the program, drivers' auto insurance rates will depend on actual mileage driven instead of estimated mileage.

Drivers would either enter an odometer verified program or telematics verified program.

Under the odometer program, drivers report their mileage to the insurer. That program is expected to be less expensive than the current estimated mileage program.

According to past announcements from the department, the insurer could verify miles driven by odometer readings taken by the insurer, the insurer's agent or vendor, auto repair dealers or smog check stations, or self-reported odometer readings by the policyholder.

The telematics verified program will have mileage verified through a technological device and is expected to be less expensive than under the odometer verified program.

Regulations prohibit insurers from using the technology to gather vehicle location data for rating purposes.

"The voluntary pay-as-you-drive initiative is a cutting-edge program that will allow insurers to offer plans based on more accurate mileage, so that people who choose to drive less will pay less for auto insurance," said the state's insurance commissioner, Steve Poizner. "The regulations I finalized last year allow insurers to offer this innovative option without compromising consumer privacy. I'm pleased to see that Auto Club of Southern California plans to offer this kind of coverage to policyholders. I hope other insurers follow suit."

State Farm Mutual Automobile Insurance submitted an application to sell this kind of insurance in May 2010. That filing is still under review.

Special Reports /

Calif. Sees 2nd Company Apply For Pay-As-You-Drive

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