Car insurance is a necessary component to driving legally, but it's often quite expensive. And to those who don't drive often or very far, the cost can be daunting. Enter... Pay As You Drive (PAYD) Insurance.

Studies in the U.S. show that if auto insurance was priced by the mile, drivers would be more likely to reduce their mileage as much as 20%. Because automobiles are the single largest contributor to greenhouse gas emissions, this would mean a significant reduction in these harmful pollutants.

Another idea behind PAYD insurance is that the more miles you drive, the more likely you are to have an accident. This is based on the fact that annual claims increase with annual vehicle mileage. With PAYD the insurance premium would be based on the miles driven rather than the make and model of your car.

Benefits

• For consumers: Access to more affordable insurance and more control over insurance costs.
• For society: Initial research estimates that pricing insurance by the mile could cut total driving by 5 to 15 percent, which would slash the huge environmental impacts of the automobile and lessen the number of crashes and claims. A 10 percent reduction in driving is estimated to result in a 17 percent reduction in crashes.
  
• For taxpayers: Reduced driving would also save money on roadwork. Oregon Environmental Council, a nonprofit group working to pilot PAYD in Oregon, estimates that PAYD insurance could trim the state's road-related costs substantially over the next 20 years.
  
• For insurers: They may see an increased market share and a growing reputation as an innovative, customer-oriented, and socially responsible company. They may also have fewer claims.

PAYD in the Northwest
Oregon Environmental Council
Olympia Washington's Climate Solutions

Pilot Projects
In the United Kingdom, Norwich Union has become the first insurer to offer Pay As You Drive. Other pilot projects are being launched in Massachusetts (by Plymouth Rock) and Georgia, with funding from the Federal Highway Administration's Value Pricing Program. Progressive Insurance Company piloted Pay As You Drive insurance in Texas, using global positioning satellite technology. Also, in Georgia, state legislators have introduced a new bill that will enable insurers in the State to offer a choice between mileage-based insurance and traditional, time-based premiums.

Georgia General Assembly, House Bill 201

Related Articles and Information

World Changing: Pay-Per-Mile Car Insurance: It's Coming, Jeremy Faludi, Jan 05 2006
The Vancouver Province: City of Vancouver wants ICBC to adopt 'pay as you drive' auto-insurance rates. Those who drive more would pay more. John Bermingham and Elaine O'Connor, 2005 Apr 27
Grist Magazine: Driving a Hard Bargain, Elisa Murray, 03 Nov 2003
Eugene Register Guard: Guest Viewpoint - Per-mile car insurance makes sense for consumers, environment, Joshua Skov, 12 Mar 2003
Portland Tribune: 'Pay as you drive' Policies Get Boost, Ben Jacklet, 10 Jan 2003
The UK Observer: Pay as you drive to slash insurance bill, Andrew Bibby, 03 Nov 2002
Better World Club Testifies Before the Oregon House Transportation Committee in Favor of PAYD Insurance, Mitchell Rofsky, 2001 Apr 18
Insure.com: Progressive's "Pay As You Drive" auto insurance poised for wide rollout, Joe Frey
Pay As You Drive Definition
Cents per Mile Now: A project of the National Organization for Women (NOW), Washington, DC, and Texas NOW

EPA
The Environmental Protection Agency is developing a voluntary government-industry partnership to offer recognition and support to insurance companies who offer Pay As You Drive.

Pledge Your Support
As of January 2003, approximately 10,000 have pledged their support for Pay As You Drive insurance through the Environmental Defense Web site.

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