Slashdot Mirror
California's Revised Pay-As-You-Drive Insurance Draws Continued Objections
The EFF has restated many of their original privacy objections about California's latest revision to the Pay-As-You-Drive auto insurance proposal. Admitting that the amended bill is an improvement, privacy advocates are still uneasy about the surveillance implications of this program. "The proposal centers on a simple idea: infrequent drivers are less of an insurance risk. By pricing policies according to the mileage driven, insurance companies can offer discounts to lower-risk infrequent drivers, and put an appropriate cost penalty on heavy drivers. The state estimates that 30% adoption of PAYD insurance nationwide would reduce miles driven by at least 10% among subscribers, and save 55 million tons of CO2 over the next ten years. The benefits of such a system could be quite dramatic, as California Insurance Commissioner Steve Poizner is sure to emphasize. Such insurance plans first became available in 2004, and are now available as a limited option in 30 US states from insurance companies like Progressive and Liberty Mutual."
Another oppressive government plan to coerce people to emit less carbon dioxide.
--
Chuck Norris doesn't need Twitter. He's already following you!
How is someone who drives less better at driving? It would seem someone who drives less frequently is less practiced and would be a greater risk as compared to someone who is a regular driver. There must be some sort of bell curve where the people on the ends pay more.
This is my sig. There are many like it but this one is mine.
Why would anyone think that paying by the mile would reduce the amount I'm driving?
I don't go on long jaunts around the town just for the hell of it, I go because I need to get somewhere, or pick something up.
So pretty much what this would do is either be a savings for me--because it'd be less than my buffet style policy--or it'd be more expensive for me. I'm guessing that the majority of people, myself included, would fall into the latter category.
I currently have no clever signature witicism to add here.
I get cheap insurance because I only drive on weekends. My insurance company just wants to check the reading on my car's mileage meter every six months or so.
I don't understand why anything more invasive than that is at all necessary to give a break to infrequent drivers.
just don't know how it can save "55 million tons of CO2 a year"....people who drive a little will continue to drive a little with this insurance or not.
I hate it when they fudge numbers and try to draw a causation out of it.
A chicken didn't lay an egg because there was a law passed that gave tax incentives to the chickens to lay eggs....
I hate it even more when politicians take credit for something that has nothing to do with anything.
Couldn't you say that a driver who drives less has less driver experience than somebody who drives more? Therefore the driver who drives less could be a higher risk?
I don't drive very often, but when I do drive, I always have a case of Dos Equis with me.
https://www.eff.org/https-everywhere
People that drive less are less of an insurance risk? Perhaps as the time driven approaches zero ... but I would think people that drive well are way less of an insurance risk. This assumes of course that they only need to pay out when at fault. Shouldn't this at least be weighted by some sort of driving test that evaluated real-world conditions?
but it lacks any practicality fo California.
All this will do is make insurance unaffordable to low income families that have toi drive due to the distance they must commute. Meaning more uninsured motorists.
They al ready take it into account some what, and that's enough.
This is just attempt to squeeze another dime out of people who must have this service.
Quite frankly, if the Government is going to mandate insurance, then it should also offer a base insurance program, at cost.
Just one that covers the minimum insurance levels. If you want more, then you can buy more from an insurance company.
The Kruger Dunning explains most post on
I'd always thought it would be a neat idea to roll auto insurance in at the gas pump. No more uninsured drivers, plus it would be an incentive to reduce driving. obviously LOTS of holes in the plan, but it would eliminate the big brother aspect of this proposal.
Insurance companies already charge more if you drive more; all of them that I know of ask how much you drive. I actually started to RTFA, but there's little to no explanation of what the "pay as you go" does, and as I don't live in California it's not likely to affect me unless it's adopted by other states.
Can anybody clarify for me?
Free Martian Whores!
Sunday drivers have got to be the most dangerous people on the road.
Someone who drives 100K miles a year is going to have a lot more miles between accidents than someone who does 5K.
I'll see your Constitution and raise you a Queen.
I would have no problem with this if people were actually given the choice of whether to sign up for a pay-as-you-drive plan, but as it stands, this hurts consumer choice without any real benefits. It is unlikely that people will really drive less, because they still need to get to their jobs and to stores that are miles away from their homes. If we want people to drive less, we should be investing in mass-transit systems which will help them do that, thereby increasing consumer choice rather than decreasing it.
I have decided that in light of our depleting ozone layer, that I will begin charging for everyone who is breathing my air. You see, it was only my great ancestor Muk'targ of the Great Cave who was in charge of all the sky. His Gods told him so. So therefore he has passed this great gift to me and me alone. So as of right now, the entire population of the Earth owes me for each breath of air they take. Now if you can't pay, that's okay too. Because I will use my new portal device to adapt the air you breathe so you only have to pay for what you use. Now if you happen to die because you don't pay, how could you expect this to be my problem? Oh and the rates will be raised very little. Maybe only 2000% per year.
The dangers of knowledge trigger emotional distress in human beings.
I can see health insurance companies adopting this logic:
People who frequently exercise are less of an insurance risk. By pricing policies according to the amount of physical activity a person gets, insurance companies can offer discounts to healthier people, and put an appropriate cost penalty on basement-dwelling nerds, obese people, and other physically-unfit people.
Is there some kind of petition I can sign to get this rolling?
You think insurance companies will lower prices for the average Joe with this? I think not. Their claim experience isn't going to change, and they need to charge X dollars to all customers combined so they make a profit. They're still going to need to charge X dollars, so what's going to happen? Heavy drivers will pay *more*, and everybody else will pay about the same as they are now. Bah!
ON DELETE CASCADE
I mean, it sorta makes sense... but then again it also doesn't.
First I would point out that someone who drives 20k miles a year for 5 years drives 100k miles. A person who drives 5 k miles a year only drives 25k miles. So essentially, the 20k miles driver has 75k miles more driving experience than the lower milliage driver....
I would expect that sort of difference to start to really add up.
That said, the point of insurance is to mitigate risk by spreading it over many individuals. While it makes some amount of sense to charge relatively higher risk people more, doesn't it, eventually, start to defeat the purpose when you keep looking for more and more ways to do that?
Of course, it mostly makes sense if you assume the higher prices for the more risky people actually means lower prices for the less risky, when I would bet the reality is that the only way low miliage drivers will "pay less" is that they will "pay less than the new surcharge on the high milliage drivers" and not in any way, "less than what they pay now"
Kind o flike here in MA where the insurance companies are given license to surcharge for "offenses" like "not having the registration paper in the car" (sure its an offence, but its still a valid registration with valid insurance.... how exactly is not having the paper itself in the car... which contains no infomration that a police officer can't look up from his car in under 20 seconds... is a problem for them)
or how they support "traffic safety cameras" which have been shown to increase accidents at intersections. Makes sense.... major accidents cost money. However, the massive number of tickets and minor fender benders those cameras generate are an absolute windfall for the insurance company when they can hit you with YEARS of surcharges.
-Steve
"I opened my eyes, and everything went dark again"
WTF? Am I missing something? Last time I got insurance for a vehicle (in California!), the guy writing the policy asked me how many miles I expect to drive per year. They have a number of mileage brackets that are used in the calculation of your premium. The more miles you drive in a year, the more money you pay. Back in the before time, I had a classic car that was a weekend ride. Insurance was cheap because it was classified as "pleasure use" and driven less than a thousand miles per year. I don't think I've ever had a situation where the estimated annual mileage wasn't used to calculate the premium.
Not going to RTFA article, but I can't see how you could screw this up. Let everyone self-report their mileage and then recover whatever you had to pay out if an accident occurs and mileage is off by more than 20% or so. That's the system used here (Europe) and I've never heard anyone complain about it. No privacy violations involved, either. If you don't trust the self-reporting, it'd be easy to verify mileage in regular intervals by tying it to i. e. existing mandatory emissions & safety checks.
Fleur de Sel
I'm using Milemeter.com in Texas, it's billed by the mile. I'm paying about half of what I payed my previous company with same coverage.
But it only works people driving under 12k a year.
and life insurance companies would charge the active people more as they walk/cycle more and ate therefore at a higher risk of getting run over by a vehicle...
I drive from Nor Cal to So Cal, over 500 miles, one way, several times a year to visit family. I'm at far less risk than grandma Owho barely drives 500 miles in a month, or the teen who is an idiot with her cell phone (even though it is illegal already) or ....
THIS is the problem with Government. It is a ONE SIZE FITS ALL program that doesn't fit anyone. I've been driving over 20 years, with exactly 4 accidents, none of them my fault.
I have a 13 year old vehicle, bought new, with 150,000 miles on it, that hasn't had one insurance claim. I know some people who can't make 40K without totalling their vehicle.
Everytime someone says ... "there ought to be a law" get ready to bend over!
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
Hate to break it to you, but many already offer discounts for active lifestyles and quitting smoking, etc.
Except that we do know this to be true... its been proven in scientific studies. Do you have a study that shows driving more increases your risk for an accident?
let's just stick a gps chip in everybody's skull, make its location publicly available, and be done with the whole privacy thing. then we wouldn't have to spend so much time worrying about it.
weinersmith
I thought the point of insurance was to distribute risk and cost over a group for both the insurer and the driver so that no single individual would be overwhelmed from unexpected expenses. This plan reduces the risk and cost to the insurer but transfers cost from one group of drivers to another group of drivers. It's another step toward customizing insurance plans to a single person customized insurance plan--rendering insurance worthless for those at high risk, yet it's required by law. If one were to apply this to medical insurance in that those who use more pay more, there would be public outcry.
Camping on quad since 1996.
How do you monitor this?
I can't believe many people will violate federal law to commit fraud by unhooking their odometers. This is already illegal, and somehow the leasing companies are willing to trust the odometer readings, and there is a substantial financial penalty for exceeding lease mileage limits thus creating a large incentive for fraud. And if someone does lie about their odometer reading and has an accident, the insurance adjuster can report the milage to the company so they can verify the mileage.
Besides, I always figured that modern cars wouldn't operate well without a working speed sensor. If the odometer is so easy to bypass, then maybe this issue can be addressed through the car companies. It's already illegal to bypass the odometer, so the car may as well enforce that.
Except that we do know this to be true... its been proven in scientific studies. Do you have a study that shows driving more increases your risk for an accident?
I guess this is appeal to authority, but actuaries aren't generally known for their wild flights of fantasy. If Insurance companies are offering lower premiums for people who drive shorter distances then it's almost certainly because statistically they pay out less in claims to those drivers. Is there really some reason to suppose otherwise?
To summarise the summary of the summary: people are a problem. ~ h2g2
The annual estimates used by my current insurance provider seems to work well enough. And if that isn't proof enough, they could simply track my odometer readings when they do the emissions inspections or something.
Being an infrequent (and thus probably inexperienced) driver doesn't necessarily make you less of a risk. My car insurance is currently pretty dirt cheap ($400 / yr.) due to many factors (it's our only car, we're married and over 25, and our speeding and accident record has been clean for the past 5+ years). But we drive plenty, both for work and recreation... at least 15k / yr.
In fact, the one time I did get into an accident, it took two other morons acting in concert... one in front of me to stop at a green light, and one in a fully-loaded Mack behind me to stop not.
Anyway, I'm all in favor of using technology to improve things like traffic reporting and stuff like that, but I don't think insurance is one of the primary applications.
give everyone free auto insurance and increase gas taxes by enough to cover it.
Here's a free-market proposal to this "problem":
- Require vehicles to have insurance to certain minimum levels. Allow the insurance companies to bill however they want: flat-rate, per-mile, or GPS-tracked, and based on any criteria they want to use. Let customers pick their own insurance companies. Any driver found to not have insurance would face an extremely steep penalty [steep enough to make then wish they had insurance]. A negligent driver who causes an accident and doesn't have insurance will find themselves bankrupt, thus setting examples for everyone else.
- That's it.
There are already drivers who will cancel their insurance the second they get their proof-of-insurance card, so they have something to show when they get pulled over. This won't stop--they'll just buy something like 100 miles of insurance. It's "enforced" the same way: if you cause an accident and your insurance has lapsed due to time or miles, you're on your own.
If you're willing to let your insurance company put a GPS tracker in your car, you could potentially have very low insurance rates if you're a safe driver and don't drive very much. If you don't want a GPS, you could at least submit odometer readings--again, lying about your odometer means you're on your own if an accident happens. If you value your privacy so much you don't even want your odometer read, just get flat-rate insurance.
Yes, I know there are GPS "jammers" out there, and insurance companies would probably develop ways to detect this--if it's obvious you're jamming the signal, you get dropped. It's called a "contract"; insurance companies tend to make you sign them.
The Federal Highway Administration is already suffering shortage of funds due to fewer vehicle miles driven. There's been talk of more toll roads, increasing the gas tax, etc.
As I see it, encouraging people to drive even less will further decrease the revenue collected for road repair- which could mean fewer repairs, more time between repairs, and/or an incentive to raise the gas tax or invent new "usage fees". This could end up increasing the total cost- even though you're paying less for insurance, you're paying more for gas, tolls, etc.
OK so assume CA mandates this and then follows up with mandating a law that requires every vehicle in CA to be fitted with some kind of GPS or similar tracking device:
1) What happens when the tracker in my car suffers some kind of *mysterious* electronic failure? Am I going to be fined?
2) Who is going to pay for the tracker and the installation?
3) What happens when a faulty tracker drains the battery? (Oddly enough I've seen this happen in a fleet vehicle)
4) How do I get the lucrative contract to maintain this massive tracking infrastructure system?!!
5) Anyone want to bet that this gizmo won't also be recording speed - insurance companies probably value that info more than distance. Betcha law enforcement will have de facto rights to query your gizmo right there on the spot when they pull you over - probably have a built in blue tooth so they don't even need to get out of the cruiser to write you up.
We're already paying per mile in the form of taxes on each gallon of gas we buy. They must be gearing up to address the revenue threat posed by the as-yet impractical plug-in hybrids. Crappy idea all around in my opinion.
If there was any kind of mass transit, I would take it vs. the 2 hours I spend behind the wheel each day. I'll go out on a limb and say I'd take it at the cost of an additional 30-60 minutes transit time; at least I could get stuff done on the bus/train and I bet I'd have lower blood pressure to boot.
This driving close to home bit sounds dangerous!
Everytime someone says ... "there ought to be a law" get ready to bend over!
I'm in, or you're in me - either way its a party!
Use number of trips, not miles -- just like when comparing whether airlines are safer than cars:
http://www.midtod.com/98autumn/airline.phtml
Seems like mileage might be a poor indicator for this (though part of a valid equation). Wouldn't a better system involve the number of 'instances' of driving? Or perhaps actual time spent driving? Are people who commute on a highway every day for an hour (like me) really more likely to have an accident overall? Seems like we'd at least average safer on a per mile basis. Also, since this would require robots to know more me my driving habits, we hates it.
What? They know the age of your grandma, or some teen. Did they say they were going to throw out every other measurement? Obviously this shouldn't be a law and industry should figure this out as well.. I know the nature of your complaint but I don't agree with the specifics...
What I am wondering is this: If the data shows that people with a certain age group that drive less than a certain number of miles per year have the highest accident and claim rate, would the insurance rates for that group go up? Will the politicians have the guts to counter the outcry from the AARP?
Your first premise is wrong. California DOES NOT exist because it is paying its current payables with I.O.U.s.
Other states to follow.
Yours In Accounting,
Kilgore Trout, C.P.A.
Assume for the sake of argument that I think a reduction of CO2 emissions is important and a good idea (I do, basically) and that distance-based insurance premiums are a good idea (not sure).
Citing a reduction of CO2 emissions as a side effect of distance-based insurance premiums is still stupid and annoying. It's bad and they should feel bad for doing it. They are problems that make more sense to approach separately, since they have very little relation to one another.
You're trying to use a one size fits all excuse to criticise the government and in this case it doesn't fit.
You see, insurers employ very highly paid guys to work out your risk to them as an individual. If your driving history shows you to be low risk, that will be reflected in your premium - insurers want your business, but equally don't want to lose money by providing you with insurance.
I can understand concerns about getting the privacy aspects sorted - why doesn't the state simply automatically report each year as part of your annual inspection? But the principle of using miles driven as an aid to calculating risk is one everyone with insurance already subscribes to.
Thanks to the interweb, shopping around for insurance is trivial. I myself have seen a 6 month premium reduced by over $1,000 through 20 minutes shopping around on the internet. As long as you still have plenty of insurers to choose from, you'll be able to find someone that offers a fair price for the risk you reflect.
All this proposal means is that every insurer will be required to factor in the risk the miles you drive presents, and I can't imagine a single insurer that doesn't already use the mileage you reported to them when taking out the policy as a risk factor.
I guess you don't want to know about the vehicle 'black box' in all car that have air bags. Insurance companies don't want you to know!
http://www.crashspeed.com/airbag_control_module.htm
Aren't we already charged based on estimated car usage? This article is about privacy objections and laws regarding monitoring miles, is it not?
I've always assumed the miles I enter when renewing my insurance went towards calculating the total premium. Actually, my insurer even told me so when I thought my rate went up - they said I was driving more.
If they wanted us to drive less, there are plenty of other ways to do it, rather than hacking our insurance. Idiots.
Shouldn't California be concerned for those growing central valley towns and cities like Tracy?
There are hordes of people commuting daily from central valley to silicon valley for work.
There would be even less incentive for people to move out there if PAYD was mandatory, which would cause the property values to drop even more than they have.
I'll go out on a limb here and also say that with the amount of miles these commuters drive daily, I bet you they have better intuition in how to drive well to avoid accidents vs. the occasional inner-city driver who drives twice a week to the grocery store...
MyRate by Progressive (as mentioned in the summary) has been around for quite some time (in select states) and I am a longtime customer. Here is how it works:
You get a computer chip that installs on the ODBCII port on your computer. Every 6 months (when you renu your policy), you pull out the chip, plug it into your computer via USB, and upload the data with your policy renewal request. You can view charts of your driving speeds, times, etc.
Progressive then offers you a discount percentage off of your base premium. They have an explicit policy that utilizing this chip cannot INCREASE your premium, only give you the option of a discount (in other words, we overprice our policy, but give you an option to recoup it if you drive less)
The discounts are as follows:
5% = participation discount
5% = safety discount (stay below 75mph and the discount is yours)
up to 10% = based on driving time / milage.
The 10% is calculated roughly as such.
At the beginning of the tracking period, you are given a 10% discount. then for every mile you drive, that percentage is reduced by a fraction. That fraction (something around 0.0006% per mile) is determined based on the time classification you drive. they have 3 classifications of driving time, low, medium, & high. High are times such as rush hour, and overnight, medium are weekends & lunch hour, low is everything else.
Ultimately, with both the safety discount and the amount I drive, I end up with somewhere around a 16% discount off my policy renewal.
It can be compared to the california policy, but in reality the current offered program seems quite different from the proposal.
I'm a consultant, I'm not out commuting every day of the week though I do drive a few times.
However, I like to go on long, multi-hundred mile road trips just like you. There's no consideration in this plan to say if I'm driving in a city or not, or even accounting for where I put the miles on at all.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
"I'm at far less risk than grandma"
that's a self selected bias.
"fault."
irrelevant. The more time on the road, the more likely you are to be in an accident, regardless of fault.
Of course, this is just ONE factor when determining premium prices.
The Kruger Dunning explains most post on
The premise is faulty. Open highway driving is far safer than inner-city rush hour traffic.
You need to consider the conditions, not just the distance.
-Jeff
Please learn the difference between a dissenting opinion and a troll before you moderate.
Many medical options already do, via incentives. My insurance company pays 20% of any gym membership I want to sign up for. I have a friend whose insurance company sponsored a contest for individuals reducing their blood pressure, and he ended up winning a high end exercise bike. They don't typically charge less, but they are actively increasing their "Value added" features to reduce the cost of claims.
Drivers that drive infrequently are probably not a lower risk. At least not a lower risk in terms damage done per miles driven. If anything they are probably a Greater risk, since they get less practice behind the wheel. However, since they don't drive much, they will have fewer potential incidents of damage compared to people that drive many miles and encounter much more traffic and potential obstacles.
The only risk being managed here is the pocketbook of the insurance company. The infrequent drivers are only a lower risk from the point of view of the threat of having to pay out. But that would be true for all of us. If no one drove, auto insurance would rarely have to pay for anything, and all those premiums would be pure profit.
Behold, this dreamer cometh. Come now, and let us slay him... and we shall see what will become of his dreams.
My insurance policy in Missouri caps my driving at 13,000 miles per year. If I want to drive more, I "have" to pay more.
That being said, I've been driving for 13 years. I've been rear ended once which was 100% on the other guy. I was hit-and-run'd in a parking lot while at work, so that's the only claim I've made against my car: which totaled to about $8-900.
Yet, as a single white male under 30, I pay more than most people who have worse driving records (via points or accidents.)
Explain how that is fair, insurance companies?
I have a strong speculatory sense that this article will bring the average revenue for insurance companies up, and the cost savings will be only for a small margin of drivers. Look at the comments: I'd say the majority of people don't want this. I'm not surprised they support this under the guise of helping mother earth to try to sway people.
The insurance companies can, will, and do account for that. This stuff isn't hard to model. The basic idea is that you have a hazard rate per mile driven. More miles driven means more hazard. However, that hazard rate doesn't have to be the same for all drivers. The hazard rate they'll use to model your cost will be based on the experience of drivers in your same risk class, i.e. pretty low.
I am not a property/casualty actuary, but I am an actuary.
My only political goal is to see to it that no political party achieves its goals.
Seriously, whining about "low income families" everytime something useful gets proposed is getting a bit old. Won't somebody please think of the children!!
"All this will do is make insurance unaffordable to low income families"
Well then the low income families need to drive less. Actually everybody needs to drive less, regardless of income.
... That could save money and trouble: Insure the Driver, not the Car. In the State of Utah, if you (an individual, no family, etc) have 4 cars that are capable of being driven (registered, etc) you are REQUIRED by law to have insurance on each vehicle...so figure as cheap as you can per vehicle and times that by 4 or as expensive as you can imagine, and times that by 4... Why not figure the most expensive to insure vehicle that you own, and just charge you that much...then you could drive any other car you own, and it would be covered, because your insurance is geared to the most expensive to insure car... This makes sense because you can only drive one vehicle at a time. Then I could also drive other people's vehicles (no real special rider needed) because my insurance would be on ME and not on the car... Rental agencies do this to some degree... As for this idea...I don't see what the problem is. Each year you go in for Safety and Emissions inspections, just have the agency take the odometer reading and report back to the insurance company, who then figures the miles driven by a simple mathematical operation called "subtraction"...who then sends you a bill for the insurance on the miles driven (or an estimate of the miles you drive per year, making up the difference (to you or to them) in subsequent years...) How much more simple could it be?
--E--
Maybe they will finally use this as an excuse to put a GPS monitor inside every car....
Lovely...
Tsukasa: All I really want, is to be left alone...
I've combed through the 108 comments so far that have been modded 2 or above, and not a single one of them shows any awareness of what the article actually talks about. Has anybody actually read the article? Oh, wait, this is slashdot...
The article helpfully explains that the main issue being raised by the EFF is privacy. Um, it's not exactly subtle...the article has a big image of a poster with a man's face, with the slogan "BIG BROTHER IS WATCHING YOU."
What the EFF is objecting to is the idea of using electronic monitoring to measure the number of miles driven. The article (remember that article thingie? it's got that little underlining thingie, with the text in a different color, so you can click on it, and it's, like, a hyperlink, so you can go and read it?) lays out some objections to this, such as the tendency the government has demonstrated since 9/11 to go nuts with intrusive monitoring of its citizens. The concern is that the government will then be able to tell where every citizen drives. That's pretty darn scary, if you think about it.
Find free books.
The proposed regulation states "Amend Title 10, Chapter 5, Subchapter 4.7, Section 2632.5 to read as follows:
Sec. 2632.5 Rating Factors
(a) Every insurer offering or issuing a policy of automobile insurance shall establish a class
plan for the calculation of rates that specifies rating factors in accordance with this section and
which complies with the good driver discount requirements of California Insurance Code Section
1861.02 and all other statutes providing discounts in automobile insurance rates and premiums."
Why the heck is the state micro-managing this? For that matter, why does the state mandate "good driver discounts"?
The state should perhaps set the mandatory minimum level of insurance per driver to drive on the public roads, and then leave it to the insurance marketplace to figure out how best to parcel out the risks (flat rate, GPS, good driver discounts, etc.)
This kind of state regulation and mandates is why health insurance costs so much!
If Insurance companies are offering lower premiums for people who drive shorter distances then it's almost certainly because statistically they pay out less in claims to those drivers. Is there really some reason to suppose otherwise?
But they also factor in age and experience (and other things). A newly licensed 18 year old that only drive 10 miles a week will still pay much more than an experienced 40 year old that drives 200 miles a week.
I already get a low-mileage discount on my auto insurance from State Farm ( 7,000 miles/year), and I imagine other insurance companies would have similar programs. So what's this bill proposing that insurance companies don't already do?
I knew a girl in high school who was a tremendous athlete. She played on the school's basketball team and come senior year all kinds of universities were knocking on her door to get her to play for them. However, the offers dramatically decreased when she blew out her knee and needed to get surgery. She probably got more exercise in one semester of high school than I did the whole four years, but also needed way more expensive medical care than I ever needed. My point is, even though exercise may prevent some health problems (eg problems related to being overweight like diabetes), people who exercise a lot are prone to injuries. Not to knock exercising, though, I'd much rather be an otherwise healthy person with a bad knee than someone who is dependent on insulin just to stay alive, but I'm not sure how effective that strategy would be at saving money.
... I found that the device did change my driving while it was installed. As I was reviewing the data that comes of it every couple of days, I would instinctively try to beat it. I would not accelerate and brake abruptly, speed, etc., which in turn lead to keeping longer distance between me and the vehicle in front and drive defensively. For the couple of months I was using it I was a safer driver. As a side effect my fuel economy was somewhat better.
So how is making me buy a tracking device in my car and the central tracking system going to save me money? Perhaps making every mile more expensive will get me to cut back some, but 10% is not going to be cut. Who is selling these tracking devices? Are they contributing to election campaigns? Are they going to be "FREE" ie I will pay for them in hight taxes? Will the logs of where your car has been be available for review and dispute. It could be fun to attach the tracker id of Ahnold to a city bus. If the logs are kept, can they be sold to advertisers? Will I get smut adverts because I cut through a bad section of town? Will the road taxes become flexible based on which route I take?
I smell more of the American PC correctness and stupidity here,
If you own a car, you need to get annual insurance, and expect to get it with No Claim Discount, as I live and do a lot of business in a country DE, with no speed limit, and the big BMW & Mercedes are limited at 260K (160 MPH) I go to a lot of trouble to make sure my car is in tip-top mechanical condition. I drive about 40,000k / year, I get 70% NCD, which I also insure, so I can sue Englander who drive into me in car parks.
So the whole basis of this proposal is nonsense, the more you drive, in a good car, quickly the better you get good at it.
I remember, nearly 30 years ago, pulling out of a motel in Maynard, MA well In front of a State Police car, whose driver took offence, but could not stay on the road at 50 MPH in thick snow and ice. When I stopped for breakfast, and he caught up, about 15 mins later, he tried to complain until I produced my fuhrerausweiss and explained we do that every day for 3 months each winter in mountains.
I only ask because the last two times I moved (to new places in the same city), my insurance went up because I changed zip codes. (At that point I became suspicious and switched companies which "reset" my insurance cost back to its proper level.)
I think there's a much higher probability that fine-grained tracking will result in the customer being penalized by the insurance company than that they will get a discount. If they're willing to increase my premium for moving to a new house, you can be certain they will increase your premium for minor speeding offenses.
Said it before, I'll say it again: I will NOT consent to tracking devices of ANY sort installed on ANY vehicle I own. Period. They can kiss my ass.
Are YOU using the TOOL, or is the TOOL using YOU? Think about it!
to make travel affordable, it should have more public transit.
While I'd like better public transportation, people in the US will not use it just because it's better. Many of those who own their own vehicles do not want to and will not give up their vehicles unless they have to. I've put less than 50,000 miles on the car I've owned almost 9 years yet I am not willing to depart with it. For me, I don't want to lose the freedom to jump in my car whenever and drive wherever so long as I can afford it. At the same tyme I'm not against raising fuel taxes, I've actually advocated raising them.
Falcon
Should there be a Law?
Insurance companies, just like electric companies as well as municipal water and sewer providers are still operating under the paradigm that existed in the early 20th century. That assumption is that the service they are providing, is either, for, or is, a luxury. At one time, driving was a luxury, at one time electricity was a luxury, at one time city water and sewer were luxuries. Until these providers enter into the 21st century with the rest of us and realize that these activities and services are necessities, you will keep seeing all kind of inane ideas as they try to make a buck.
I read Slashdot for the headlines, because the headlines, unlike the articles, are usually original and never duplicated
hands.
The answer is a shopping cart
Yea, like someone's going to get that shopping cart on a bus with it full of groceries.
There's also carsharing.
Carsharing is not that widely available or known about. I like the idea myself, for those who don't need or want vehicles much carsharing is terrific, but I am not willing to get rid of my car.
Falcon
Should there be a Law?
It's good to see that California isn't letting their impending bankruptcy hold back their socialist agenda.
I lived in LA for 6 years. California is probably one of the worst places to try to implement this program as: (1) they have a massive amount of urban sprawl, (2) Los Angeles has incredibly inefficient public transportation, (3) and there are broad swaths of the state where driving is almost a necessity for people who can't afford to live in the communities that they work in.
Is this really such a problem that is needs to be addressed right now? As others have said, there are going to be no deals here. Insurance companies will make sure that they profit over this little experiment. Furthermore, the state officials may mean well, but the federal government has shown that they will not hesitate to violate our privacy. Why give them another mechanism to do so?
But what really puts the cherry on the cake are the little comments that this will reduce CO2 emissions. Newsflash: Most people don't drive more than they need to, and the ones that drive for fun are just going to pay the tax and keep driving. Why does every method for reducing CO2 emissions have to involve punishing people while giving money to industry for absolutely no innovation? Do you think I like sitting in traffic with 3 other carpoolers? Build some efficient public transportation that actually works and people will take it. Reduce urban sprawl by not allowing people to build homes anywhere they feel like. Those are the techniques to reduce driving. Look at NY city. Look at all of Europe.
Must be your insurance company. Mine has never asked how much I drive.
This will depend on where you live and which insurance you have.
I've never been asked how many miles I'll be driving.
FAIL. My grandmother drives infrequently. She is not a low insurance risk.
Driving frequently increases exposure to risk, but it also reduces the risk along a separate curve. Someone who drives 40,000 miles a year tends to be a better driver than someone who only does 5,000 miles a year. Especially if the 40K driver has a record of being accident free.
Insurance companies are very much interested in looking for ways to profile drivers into high risk categories. What's next after having GPS devices?
- Variable rates based on how close you are to home? (Most accidents happen within 10 miles of home!)
- Variable rates based on what kind of road you are on (I like to ride my motorcycle in the Santa Cruz Mountains. Lots of accidents up happen up there.)
- Increased premiums for driving at night, or in the rain?
- Variable rates for the speed you drive at?
The big story is that the state of California wants to mandate pay-as-you-drive.
Where's your source? TFA doesn't say pay-as-you-go will be mandated.
Falcon
Should there be a Law?
Must be your insurance company.
I've had insurance through different insurers and they all asked for mileage.
Falcon
Should there be a Law?
People who frequently exercise are less of an insurance risk. By pricing policies according to the amount of physical activity a person gets, insurance companies can offer discounts to healthier people, and put an appropriate cost penalty on basement-dwelling nerds, obese people, and other physically-unfit people.
I wish. If only health insurance premiums were at least partially based on the life styles of the insured. The one problem I have with it is that insurance companies will want to monitor people.
Falcon
Should there be a Law?
There's a decent chance that a combination of both approaches is more efficient than either on its own, though. This would involve a fixed rate at the pump that provides a baseline level of insurance, plus compulsory supplementary coverage whose rate depends on the actuarial tables on age, record, car model, etc. The pump insurance might pay only up to a fixed amount per incident (or victim, perhaps?), and the rest of the coverage then would have to come from the supplementary policy. This way, a portion of the claims paid for each accident comes from taxes based on distance driven, and another from insurance rates based on the driver's record, car model, etc.
This is not to say that this is necessarily better than having insurers just check your odometer periodically; rather, the point is to remind us all that insurance schemes can be composed to produce different outcomes than each of them independently. It all comes down to whether the cost of the extra complexity is lower than the savings from the improved measurement and pricing of the risk factors.
Are you adequate?
All baby chicks are the result of rooster rape.
Historically insurance originated as part of the mercantile economy of the British Empire. A ship was an expensive thing, and the loss of a ship could ruin a middle class merchant. So they'd buy insurance--basically they'd pay a fee to a wealthy noble who would then gaurantee the value of the expedition--if the ship sank, they wouldn't lose anything. The amount they paid would be proportional to the risk of losing the ship, the value of the ship/cargo, and plus a margin of profit. Without that profit there'd have been no point for the nobleman to enter into the deal, and the state certainly wasn't about to assume to risk for the merchants.
You're leaving out Lloyd's, which was the most crucial link in the story.
Technically, the ship owner would approach Lloyd's of London, and they'd send a guy out to look at the ship and its crew. They'd then do some calculations based on the sailing date and expected weather, and come up with a price. The ship owner would pay the price, and Lloyd's would take a cut.
Lloyds THEN would turn around and sell all of the risk on the trip. They'd approach (as you say) a rich guy and offer to give him money in exchange for the rich guy to assume some or all of the risk on the trip, telling them the relevant details (good captain, but might run into storms, etc.)
In such a fashion, Lloyd's never had any risk at all, because they'd sell off all of the risk to others.
If the voyage did well, the rich guy(s) got to keep the money paid to them by Lloyd's, Lloyd's keeps their cut, and the ship owner has his ship. Everyone's happy. If the ship sinks, a well dressed gentleman from Lloyd's visits the rich guy(s) and tells them to pay up.
It still works that way today. If you're a wealthy Dubai tycoon, Lloyd's will happily pay you a nice sum of money to assume the risk on, say, an oil supertanker about to sail around the world.
Tax what you want to reduce directly, not indirectly.
If heavier vehicles cause more damage to roads, then charge them more by gas tax, diesel tax, annual registration and on toll roads.
If excessive CO2 is what you want to reduce, tax vehicles that produce it on a graduated scale.
If unsafe driving is to be taxed, have a fine for every accident regardless of fault, but the fine should be higher for the 'at fault' party. The other vehicle may have been responsible in some way too, so fine them for being at the wrong place/time.
Directly tax what you want to discourage so there's no way to game the system to avoid producing the actual desired outcomes.
I'll be sitting in heavy traffic, clogging up the streets, taking longer to reach my destination, and probably causing more accidents and safety issues.
This is an incentive?
The expressway is safe. You and you car are now at much higher risk - and your premiums skyrocket.
Your fuel costs go up.
Your maintenance costs go up.
The federal minimum wage rises to $6.55/hr on July 24. That's the minimum you lose for each hour wasted in your daily commute.
I was discussing this a few weeks ago with a pilot... He noted that this was already the way that insurance is charged for planes... Pay as you go based on hours and logbook. If you don't fly you don't pay (well you pay for theft and vandalism etc. that is separate.) The current insurance regime also penalizes people who want to have more than one car. E.g. get people to use a gas miser for commuting and save that SUV for carting the kids to soccer for the weekend.. If they can have ONLY one car they may end up with ONLY the SUV which is not good for the environment. Pay per use would allow you to optimize your mileage across multiple vehicles without having to pay the huge cost of insurance (with the current models) for both.
You're right that this won't necessarily have the intended consequences. Insurance costs of about $0.20/mile were one of the main reasons I stopped owning a car.
Due to expensive insurance, I switched purely to bicycle, walking, and rarely a taxi or public transit, reducing my carbon output.
No privacy concerns, far cheaper to administer, and within a couple of percent it will give you exactly the same outcome.
It's such an obvious and simple solution that I find myself siding with the tin-foil-hat brigade in thinking this is just another excuse for more control.
I guess this is appeal to authority, but actuaries aren't generally known for their wild flights of fantasy.
Except your wrong. Remember, they're a business trying to make money. They also push for laws which actually make driving less safe... lowering speed limits, installing red light cameras, etc. These things (unexpectedly) raise accident rates, and civil engineers who have no stake in red light camera vs. longer yellow light time say it, but oddly the Insurance Institute for Highway Safety (funded by insurance companies) have "studies" that contradict those finding. You see, if accident rates actually went down, they couldn't justify higher premiums. They have a vested interest in making things "just dangrous enough," so to speak.
If Insurance companies are offering lower premiums for people who drive shorter distances then it's almost certainly because statistically they pay out less in claims to those drivers. Is there really some reason to suppose otherwise?
Who said they'd be offering lower rates for those driving less? If by "lower rates," you mean they raise the rates for people that drive an average number of miles or more, technically you're right. But I doubt rates would drop for those driving below some average. Besides, most accidents occur within a few miles of home (and no, that's not the majority of trips, otherwise urban spraw would not be a problem).. so why does miles driven really matter?
If you like, feel free to find an actual study (not funded by the IIHS) that says those that drive more are automatcially more of a risk.
Where does age factor into experience? Why is the 40 year old driving 200 miles and not the 18yr old? It may very well be the other way around. Also, where you live plays a part.. whos going to be the better driver? Someone commonly driving in both city and country traffic, or someone that spent the past 50 years driving on small country roads, some of which have only recently been paved?