Huffman Legislation Would Tie Fewer Miles to Lower Premiums; Opponents Cite Privacy Concerns
California motorists should be entitled to save money on car insurance — while they help the environment — by driving less, according to North Bay Assemblyman Jared Huffman.
He’s proposing legislation that would let insurers link their rates to the number of miles motorists actually drive.
Huffman’s proposal has attracted an unlikely coalition of supporters, including environmentalists, insurance companies and automakers.
But it’s drawing flak from some consumer groups, who say it poses privacy risks and could drive up insurance rates.
The legislation is headed for a showdown in the state Capitol, where it is due for a vote next week on the Senate floor.
"My bill helps both consumers and the environment," said Huffman, D-San Rafael, who represents Marin and southern Sonoma County. "It rewards people for driving less."
But his proposed law gives too much power to insurers and doesn’t guarantee lower rates for policyholders, according to Carmen Balber, spokeswoman for Consumer Watchdog, a Los Angeles-based consumer group.
"This legislation is not going to achieve that goal," Balber said. "It says nothing about whether or not premiums would be reduced."
Under Proposition 103, which was approved by California voters in 1988, auto insurance rates are based mostly on a motorist’s driving record, experience and the number of miles driven annually.
But yearly mileage is based on motorists’ estimates, not a verified number. The practice is inaccurate and doesn’t reward motorists who are truly driving less, Huffman said.
His legislation would let insurance companies give discounts to drivers who voluntarily have their mileage verified to prove they are driving less.
A similar program in Texas showed drivers changed their habits when they were rewarded for driving less, Huffman said.
If 10 percent of California drivers enrolled in such a program, it would save 2 billion gallons of gas and avoid 46 billion miles of travel in the next 12 years, he said.
Such "pay as you drive" programs are a painless way to reduce vehicle emissions, said Justin Horner, a policy analyst for the Natural Resources Defense Council, a New York-based environmental group that is supporting Huffman’s bill.
"It’s been shown to reduce the amount people travel," Horner said.
The legislation "would ensure true mileage verification and allow low-mileage, low-polluting drivers to pay less for auto insurance," said Rex Frazier, president of the Personal Insurance Federation of California, an industry group that represents State Farm, Farmers, Safeco, Progressive and other California auto insurers.
But Consumer Watchdog and several other groups are opposed, saying the legislation doesn’t prohibit insurance companies from tracking drivers with spyware.
"We believe (Huffman’s bill) threatens motorists’ privacy by allowing insurance companies to require Californians to place privacy-invading tracking devices in their cars or else pay higher insurance rates," said Lee Tien, an attorney for the Electronic Frontier Foundation, a San Francisco-based group that opposes technological snooping.
Huffman’s bill would result in higher premiums for similar drivers who don’t take part in the voluntary verification program, Balber said. Such a two-tier rate structure would violate Proposition 103, she said.
Huffman called the opposition’s claims "extravagant" and "silly."
Motorists who volunteer for the program would be given different options to verify their mileage, including annual odometer readings, he said.
His legislation complements Proposition 103 by making mileage a more reliable factor in setting premiums, Huffman said.
The state Department of Insurance hasn’t taken a position on Huffman’s bill, but it is holding hearings on regulations that could lead to "pay as you drive" insurance.
You can reach Staff Writer Steve Hart at 521-5205 or [email protected].