Motorists in California have always been able to avail discounts based on their estimated mileage and for driving less number of miles compared to their estimated mileage. But most people have realized that they can avail further discounts from their insurers irrespective of whether their insurers have the pay-as-you-drive offers.
These discounts could be availed through the mileage verification method. There are two ways of going about it – either by self-reporting or by fitting an automatic device. This is entirely up to the motorist. The motorists can also avail discounts if they sign up for the pay-as-you-drive plan.
When the motorists choose the self-reporting option then the insurance companies will cross check the odometer readings by using third-party vendors like Carfax. These people collect data from the automotive repair shops and do a thorough verification of the data.
This whole movement of pay-as-you-drive began with the landmark auto insurance reforms initiative that began in 1988 as part of the California Proposition 103. The premiums that were calculated by the insurers were to be based on the driver’s safety record with respect to the years of driving experience and the mileage driven annually.
But as per the new regulations that have been approved by Steve Poizner, the former California Insurance Commissioner the actual mileage would be taken into account rather than the estimated mileage. This would be a voluntary alternative to the earlier system. With these regulations (with regard to mileage verification) insurers can now safely install monitoring devices in the vehicles where the data would be automatically collected. All the savings that are made will be reflected in the future premiums.
Before the launch of the Drive Safe & Save program, the State Farm motorists had two options with regard to their annual mileage policies. The two options were premiums for less than 7,500 miles or more than 7,500 miles. But according to the new program there would be savings in future premiums for every 500 miles that motorists drive below the 19,000 miles threshold each year.
So, now motorists will have 39 different segments when it comes to calculating the annual mileage and you could fall into any of those segments and each time you drop 500 miles lower you get additional discounts. So, now State Farm is expecting at least 25% of the 3.4 million policyholders to sign up.
However, Bob Devereux from State Farm has stated that these benefits can only by availed by those that drive less than 19,000 miles annually.