NU Online News Service, Oct. 21, 3:50 p.m. EDT
California Insurance Commissioner Steve Poizner has announced regulations that will allow insurers to offer pay-as-you-drive insurance products in the state.
What the insurance industry calls "PAYD" products base rates on actual miles driven.
PAYD programs have sparked some privacy concerns among regulators and legislators–most notably in California–depending on how information is collected and what information is used.
Some insurers use telemetry devices installed in insureds' cars to determine the miles driven, how the vehicle is driven, and where and when it is driven.
According to a statement by Commissioner Poizner, if a driver elects to purchase a pay-as-you-drive policy, 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; self-reported odometer readings by the policyholder; or a technological device placed in the consumer's vehicle.
But the statement notes that the final regulations "explicitly prohibit insurers from using a technological device to gather vehicle location data for rating purposes. The regulations do not affect the ability to use existing devices such as GM's Onstar system to provide services such as emergency roadside assistance."
Insurers must also specify when filing PAYD plans with the department the exact types of mileage verification they will accept, and must make all methods they use available to all customers equally.
"Pay-as-you-drive is an innovative way to give California motorists financial rewards for driving less, leading to lower-cost auto insurance, less air pollution and a reduced dependence on foreign oil," said Commissioner Poizner.
He added, "After a year of hard work by my team at the Department of Insurance and months of working with consumer groups and other valuable parties to fine tune these regulations, these regulations are now in effect, and I encourage insurance companies to start offering this pay-as-you-drive option to California consumers."
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