There is a new concept for automobile insurance being driven through our
state Legislature with Insurance Commissioner Steve Poizner at the
wheel. The idea is called "Pay as You Drive," which is already an
option in 34 states as well as in Canada and Japan, where carriers can
grant discounts to drivers who volunteer for mileage verification.
Essentially, the new concept would allow insurance companies to install a wireless device in a car so it can accurately record mileage and driving habits. The idea is insurance companies can offer discounts, such as the way
Progressive Insurance does in four states to drivers who agree to link
their rates to mileage, speed, time, hard acceleration and braking.
Assemblyman Jared Huffman, D-San Rafael, introduced a bill this year to allow
different pricing for drivers who opt for mileage verification, and it
has already passed the Assembly.
This is a broad approach from what’s already on the books. Under Proposition 103 that was passed in 1988, insurers are required to base automobile policy prices primarily on driving record, miles driven and years of driving experience in that order, but there are 16 other factors that could come into play based on risk although specific behind-the-wheel behavior is not.
The little black box can be an interesting idea, particularly for drivers with good records who don’t drive very far.
Accurate numbers could save some people hundreds of dollars, who often use estimates with insurance companies when purchasing a policy. Yet taking out the guesswork has its disadvantages.
Before drivers sign off on the black box and earn incentives, they need to know what they are buying into. Huffman’s bill is too cloudy and lacks safeguards when it comes to potential invasion of privacy. Mileage "quality" also means insurance companies can be privy to information such as where drivers go and at what time, and potentially information can be used against people in court.
The Times reported that toll officials make it a habit to turn over FasTrak data under subpoena in a variety of court cases.
And how would we determine good driving habits and bad driving habits? If
someone parked in a neighborhood that had a high crime rate, would they
be penalized; what if drivers had some questionable behavior issues
being the wheel; what if people drove more at night than day because
they worked swing shift?
Could the information go as far as knowing when a person saw a counselor, visited a bar at lunch or was cheating on a spouse in the afternoon? There’s no way of knowing how this information can be used.
Furthermore, Huffman’s bill has to clear Prop. 103 hurdles. Since that was a voter mandate, it’s almost certain that this bill will land in court and languish for months, assuming it survives a judge’s decision.
While this concept has been tested in other states and regions, and it has some potential to help certain drivers, the security issue must be addressed, and the public needs definitive answers.
Of course, this is voluntary and while Pay as You Drive participants will receive financial breaks, it’s not mandatory.
If Huffman’s bill makes it through, we have one bit of advice. Before you
put the little box in your car, just beware of what you’re signing up