Starting February, motorists in California who do not drive often can enjoy the reduced auto insurance premiums, thanks to the “pay as you drive” auto insurance policy that is due to take effect.
Automobile Club of Southern California and State Farm Mutual, two major auto insurance providers in the state, are among the first in the state to bring out these policies for the benefits of customers who do not drive frequently. Other auto insurance providers are set to follow suit soon.
As per the existing legal guidelines, customers have to only submit the details of their projected mileage to the insurance providers so they can calculate the premium. However, this does not seem to provide accurate data and hence people who drive less may not be able to save much.
Jared Huffman, an Assemblyman who has been actively involved in drafting the legislation that encouraged new programs, said that there are many studies which reveal that people who drive less cause lesser number of accidents. The studies also reveal that the number of hospital visits decrease and such drivers do not take leave of absence from their office too often. In addition to this, customers who spend less time on the road do not contribute to global warming, thus having a positive impact on the environment. Considering the fact that California is taking strict measures to combat global warming, the “pay as you drive” coverage is going to be helpful in ways more than one.
According to the plan that State Farm plans to offer, customers have to provide the actual mileage of the car to the company while signing up for the policy. If the car has the OnStar computer communication system, they can also opt for automatic transfer of the mileage details to the company.
State Farm would take mileage readings at regular intervals, either by sending their agents for inspection or by using verification services belonging to third parties such as Carfax reports and many more. The policy that Auto Club plans to offer will also be on the same line, but this provider will give consumers that option of having the device that transmits mileage automatically to be fitted in their car.
According to the estimates by State Farm, a person who travels less than 2000 miles in a year can save close to 45% of the cost that they are currently paying for their policies. State Farm also went on to say that this is sure to result in savings of hundreds of dollars for the consumers.
