News   Nov 06, 2024
 178     0 
News   Nov 05, 2024
 596     1 
News   Nov 05, 2024
 2K     3 

Pay As You Drive Auto Insurance

M II A II R II K

Senior Member
Member Bio
Joined
Apr 24, 2007
Messages
3,944
Reaction score
1,061
Pay As You Drive Auto Insurance


MIT Professor Joseph Ferreira, Jr. & Eric Minikel

PDF Report: http://www.clf.org/wp-content/uploads/2010/12/CLF-PAYD-Study_November-2010.pdf

Executive Summary

Each year, Massachusetts drivers are driving more, and with each additional mile driven, levels of global warming pollution rise. The prospect of tying auto insurance rates to miles driven, called Pay‐As‐You‐Drive auto insurance (PAYD), offers the opportunity to improve the accuracy of auto insurance rating while reducing vehicle miles traveled (VMT) and corresponding accident costs as well as reducing fuel consumption and greenhouse gas emissions.

Pay‐As‐You‐Drive auto insurance is a win for consumers, insurers and the environment:

• Consumers can save money; they will only pay for the coverage needed based on how much they drive.

• Insurers can improve the accuracy of their rating plans while providing an incentive to reduce the number and cost of auto accident claims.

• The environment will benefit from the reduction in driving that PAYD incentivizes – less driving means reduced fuel usage and lower greenhouse gas emissions.

The Conservation Law Foundation (CLF) and the Environmental Insurance Agency commissioned a study to assess the risk‐mileage relationship using actual insurance claims information in Massachusetts. This study (“Ferreira and Minikel 2010â€) offers the largest disaggregated analysis to date of the risk‐mileage relationship and the actuarial basis for PAYD.

The work analyzes data on $502 million worth of claims on almost 3 million cars driven an aggregate of 34 billion miles. The study confirms the statistical soundness of pay‐as‐you‐drive auto insurance pricing and indicates that the PAYD approach would result in significant reductions in miles driven, green house gas emissions, and auto accident losses without adverse equity impacts to drivers.

PAYD Saves Money and is a More Accurate and Fairer Method to Price Auto Insurance:

• By basing premiums at least partly on mileage, PAYD provides individual policyholders more control over their insurance costs and more accurate premiums for the type of driving they do.

• PAYD pricing reduces inequities by eliminating the subsidies low‐mileage drivers currently pay for high‐mileage drivers in the traditional pricing system.

• Even though suburban and rural car owners tend to drive more miles than urban car owners, their per mile charges would be lower. If they drive less than the average for their area, they would pay less for actuarially‐priced PAYD insurance than they do today under the existing system. PAYD Reduces Vehicle Mileage Traveled (VMT), Accidents and Fuel Consumption by 5‐10%

• Switching all Massachusetts drivers to pure per mile auto insurance pricing would reduce mileage, accident costs and fuel consumption by about 9.5%. An alternative model with a flat yearly rate plus per mile pricing after the first 2,000 miles would reduce these measures by about 5%.

• These reductions could range between 3 and 14% depending on a number of variables like fuel prices. But even the study’s lowest plausible VMT reduction (2.7%) would save more than a billion miles annually and millions of tones of GHG.

• Negative impacts of congestion will decrease under PAYD, particularly for urban driving.
 
WOULD LOVE THIS. I want a car to only drive maybe once a week without having to go to the car rental companies. But the insurance is rediculous.. No One believes I only wanna drive to my in laws as few times as possible?
 
Zipcar is modeled around this concept. Insurance is built into the rental fee, so if you never drive you pay nothing except the dirt cheap annual membership fee. Car sharing is the way to go in a dense urban setting for the odd trip here and there where driving is still necessary.
 
I think driver's insurance should go with the driver, not the car. If I have ten cars I should pay the same liability insurance (different for collision, fire and theft) as someone with fifty cars. My friends who have a half dozen vintage motorcycles can't ride them all because each has to have its own insurance coverage.
 
but doesnt zip car cost a crazy amount per hour?
Unless you drive daily, it's a lot cheaper than if you take your current car costs and divide by the number of hours you need car.

If you take your car somewhere every day, and stay there all day ... Zipcar (or Autoshare) is crazy expensive. If you take a car for a few hours a couple of times a week ... it's much cheaper.
 
well when I take my car out I want to go for the day to stratford, kitchener, london, blue mountain or Ottawa. So I basically need a car for the day.. I think ZIP CARS wouldnt meet my needs.
 
well when I take my car out I want to go for the day to stratford, kitchener, london, blue mountain or Ottawa. So I basically need a car for the day.. I think ZIP CARS wouldnt meet my needs.

Daily rates for Toronto cars are $80. Given that it includes gas, insurance, and 200km travel, it's probably pretty close to an Avis rate.
 
Autoshare is cheaper. Depends how much you use it, but the most expensive plan is only $71 a day. If you do one day a week it's about $3,500 a year ... though you'd be better with the $53/day plan ... so about $2,500 a year. Depending on your driving rating, you could pay close to $2,500 a year just on insurance.

The numbers are at http://www.autoshare.com/rates.html

If it's cheaper to own the car ... own the car. Personally it makes more sense for me to own a car - particularly with a toddler. But it came quite apparent that we didn't need 2 cars any more, except once in a blue moon.
 
Stopped reading as soon as "levels of global warming pollution rise." Can't take anyones opinion seriously if they believe in global warming.
 
I only brought car sharing into the picture because it uses the same pay as you go insurance plan that is mentioned in the article, and it works really well.

Let's not turn this into a car sharing versus car ownership debate! Car sharing is only going to be practical for people who live in the inner part of the city and already do most of their chores and traveling by foot or transit as it is. I know of many people, myself included, who only really kept their car because of the odd trip here and there where you really had no choice but to drive. As soon as car sharing came along it was finally possible to give up the car, but only because it was hardly being used in the first place.

Car sharing is not going to work for everyone. In fact, it's not going to work for 90% of the population. For the other 10% though, it may be the final straw that allows them to finally get rid of their car.
 
It's a great idea, but I doubt Insurance companies will introduce the idea because its a money loser to them especially with the amount of profits they bring in these days, a idea like this would slash that in half. The only way I see this option being available to consumers is if the government puts it into law that Insurance companies have to give this option or we get public auto insurance.

-----

I think driver's insurance should go with the driver, not the car. If I have ten cars I should pay the same liability insurance (different for collision, fire and theft) as someone with fifty cars. My friends who have a half dozen vintage motorcycles can't ride them all because each has to have its own insurance coverage.

Service Plates (aka Yellow Plates) that allow you to insure plates but not the car itself. Dealships use to use them until they switch to dealer only plates. However until recently you could have a Service Plate if you had a "Class A garage/mechanic licence"; auto hobbyist primary used it on vintage cars. But have since been made illegal by MTO for private use.
 
Make it literally pay as you drive...a coin slot on the dashboard that flashes whenever your last 25 cents worth of insurance runs out.

Car-sharing is only useful when you live near enough other car-sharers that a car-sharing car storage site van be viable in the area. There's many, many thousands of people in random places that would use the service but not if they have to travel to some more central site where the cars are stored.
 
Awesome idea, I pay over twice as much for auto insurance as I do for gas, which is ridiculous.
 
Would this work with rentals from Avis or Hertz,have not owned a car for 7 years,now my insurance rates are based as a new driver puts me out of the market for a vehicle.My car rental driver history i.e. no accidents or tickets does not count.I would not mind having insurance in place where I could use as needed based on mileage and put in place with a phone call.Could it work on this basis?
 

Back
Top