Pay-As-You-Drive
Remember the post where volunteers get more cash the less they
drove (or drove during certain times or routes)? Well, Jeremy Faludi of WorldChanging discuss the concept called Pay-Per-Mile or Pay-As-You-Drive
(PAYD). Simply, your insurance rate varies on how much you drive. Mr. Faludi discusses the benefits of such policies: equalizing cost between high and low income populations; balancing the costs paid by genders (women already pay less insurance because they drive 40% less but the reduction is not commensurate); and increased insurance options.
There would be other, non-direct, benefits as well such as helping the environment since less people would drive or take other forms of transportation. This also reduces repair costs on road infrastructure.
While several countries and, in the U.S., several states, have such insurances available, Mr. Faludi admits there would be issues, such as privacy, in implementing PAYD on a world-wide basis.
What do you think of such policies?
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Reader Comments (Page 1 of 1)
Jay 9:08PM (1/06/2006)
I wouldn't support it if the technology was GPS-based and tracked when and where I drove. But I could get behind a system that strictly tabulates odometer readings and nothing else. I'd certainly consider it.
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paul 11:37PM (1/06/2006)
Why not build the cost into the price of gasoline? Then no system would be needed
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Mike 1:29AM (1/07/2006)
I was really pissed when I got a second car and my insurance took a huge jump. After all, I wasn't planning on driving any more than before, so the overall risk for the insurer should have been about the same (assuming the second car wasn't drastically pricier or more dangerous than the first, which it wasn't). Plus I drive far less than average every year. So I really wished for PAYD insurance.
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sono 2:09AM (1/07/2006)
Why would it matter if the technology was GPS based and tracked where you drove? It would provide for fair insurance rates in a time when rates are based on a ridiculous system based on stereotypes and general demographics.
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Bob 8:52AM (1/07/2006)
This is a horrible idea. People who drive a lot (sales, long commuters who bought dream homes further from a city, etc.) are the ones going to get hurt. And why should I subsidize bad drivers who don't go very far. I put on about 25,000 miles per year between 2 cars with my wife, and we have no accident and no tickets, but because we put on a lot of miles we pay more...wrong!
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Bern Grush 9:19AM (1/07/2006)
It is fully feasible for GPS-based "tracking" to be completely private in terms of disclosing your current or past location. It is true that your insurance company would know HOW MUCH you have driven, but such a system does not require that the insurance company knows WHERE or WHEN you have driven. Appropriate encryption methods are available and contemplated to prevent any other use of the data. It is also reasonable to assume that such GPS-class systems (and they are already being built) will offer further reduced rates for disclosure of speed and time/location of travel. If set up correctly, we can all retain our privacy (to the degree that it is currently retainable!). But we could also sell some for insurance discounts if we wish. We all have our price. Free markets and technology will provide the systems and the opportunities to make insurance fairer. Regulation is needed to ensure that no one is forced to use such systems. Unfortunately (or fortunately, depending on where you sit) as a significant portion of motorists switch over to this premium method (the ones currently overpaying), those that do not switch (those currently underpaying) will see a rise in premiums. In the end a free market will drive all of us to this payment method. You best economic defense is a clean driving record starting now.
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Bert 1:13PM (1/07/2006)
We already pay by how much we drive. It's called the price of gas. Gas is taxed and somehow most of the money generated from gas taxes never seems to be used for it's original purpose. We also pay in quicker depreciation. We pay having to replace parts / cars faster.
All this is another way to suck money out of our pockets.
All the tax money goes to General Coffers and then becomes untraceable.
Part of my insurance rate is based on how much I drive to work and for work.
It's too bad that the hippie-dippie-paper-pushing-granola-reinvent-the-wheel can't find a better way to spend their time than to come up with half brained ideas.
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Steve B. 5:32PM (1/07/2006)
Bob:
Why should drivers who put few miles on their car's have to subsidize those who drive more? Why should those who live close to work have to subsidize those who insist on living at farther distances?
As an alternative which would remedy Mike's problem of adding a second car, driving the same number of miles, and paying double, would be to insure drivers rather than cars.
In other words, if a house has two drivers, it makes no difference if they have 2 cars or 10. They can't drive more than 1 at a time each. There could be a small extra charge per car for occasional drivers, but not in the manner that vehicles are fully insured at present. This works, of course, as long as the number of drivers is at least equal to or less than the number of cars.
On my truck, I've logged around 8000 miles since May of 2004. I drive it every day, but usually only to/from work or on short errands, and I live 3 miles from my office. That makes me around a 5000 mile a year driver on the truck. Why should my insurance for the truck be the same as someone who logs 20,000 miles a year or more?
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Galley 8:18AM (1/08/2006)
I average 8,000 miles per year. This system would surely benefit me.
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Scott 7:21PM (1/15/2006)
Any kind of tracking system will ALMOST SURELY be abused by those that control it. History proves this. Those that think otherwise are fooling themselves.
I can almost guarantee that with this kind of system it would only be a matter of time before everyone's rates are back to where they are now, except for those that drive a lot would have even higher rates. This is just like how cable TV used to be sold on the concept of less commercials and now look at it.
Sadly, people who would rather save $1 now at the cost of paying the same in the future PLUS have all of their private travel tracked in a database will probably represent the majority. Sigh...
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