JUSTIN HORNER is a transportation policy analyst for the Natural
Resources Defense Council in San Francisco. CARMEN BALBER is the
Washington director for Consumer Watchdog in Washington, D.C. They
wrote this Op-Ed commentary for the Mercury News.
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Forty years ago, cars in California were king. Since then, our love affair with driving has only deepened, but along the way, so has our commitment to the country’s highest environmental standards for automobiles and the strongest consumer protections for auto insurance.
Our cars have improved since the 1960s, but how we pay for the miles we drive hasn’t. Drivers can pay as much for auto insurance whether they drive five miles a month or five hundred. Unfortunately for California drivers, regulations by California Insurance Commissioner Steve Poizner that became law this past Sunday do nothing to protect drivers from overpaying for auto insurance or protect the environment.
Pay As You Drive insurance directly ties the amount you drive to the amount you pay for auto insurance: If you drive less, you pay less. Twenty years ago, voters demanded change to auto insurance in California and passed Proposition 103, requiring the number of miles you drive to be the second most important factor in your insurance premium, after driving safety record. Even though companies are supposed to prioritize mileage, most still treat it like an all-you-can-eat salad bar: Everyone pays the same price whether you eat a single crouton or three full plates.
Effective rules on Pay As You Drive would have meant insurance savings for Californians who drive less, fewer accidents and less pollution coming from cars that aren’t on the road. Instead of crafting guidelines that will protect the environment and your pocketbook, Poizner left it up to the insurance industry.
Advocates across California have called on the Department of Insurance to better implement Prop. 103 and require insurance companies to more closely correlate premiums with the number of miles their customers actually drive. New standards requiring real, visible savings for drivers who reduce their mileage are necessary for a truly green auto insurance policy. Yet Poizner refused to include any standards in the regulations to tie premiums to miles driven.
The new regulations don’t even require any new pricing. Instead, insurance companies can verify the number of miles you drive each year and call that Pay As You Drive insurance.
Verifying your miles is key to any Pay As You Drive program, but it’s not enough to make an insurance policy benefit the environment or your wallet.
On top of verifying how far you drive, your insurer needs to price mileage clearly to give you more power to control your insurance premium. Imagine how you could save if you knew the cost of your insurance by the mile.
And because the regulations are purely voluntary, there is no evidence that any insurance companies will actually make any changes. Meanwhile, the regulations weaken driver privacy and make insurance pricing less transparent changes the insurance industry lobbied for, but still offer no time line or proposal for when, or if, drivers will see any Pay As You Drive policies in California.
Strong insurance rules could reduce global warming pollution and save drivers money. By proposing weak regulations that require nothing of insurance companies, Poizner clearly missed the mark, not to mention an opportunity to show environmental leadership in a state that loves mobility and the environment.
