Rep Power: 651

Pay-as-you-go car sharing programs have seen some tremendous success in the United States, which has prompted some California lawmakers to consider applying the same principle to auto insurance. California’s Department of Insurance has introduced legislation that would allow California residents to pay for car insurance based on miles driven.

As with pre-paid cell phone programs, the proposed legislation would make it possible for California drivers to pay as they go. Insurers would offer drivers different packages, eliminating overpayment for miles rarely – if ever – driven.

For drivers willing to opt for a mileage verification program, the savings would be even greater. Instead of purchasing a policy for X number of miles, the verification program would insure customers on a real-time mileage basis – ensure drivers would pay for exactly what they get. Mileage verification would be completed through odometer checks at insurance locations, fix-it shops, emissions check centers and even via GPS devises. Although the GPS devices would be able to keep track of mileage, they won’t be able to relay a vehicles location.

The legislation has yet to be put into California law, but it could go on the books in the coming months. If the program proves to be a success, look for the legislation to to other states around the country.



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