States Consider 'Green' Auto Insurance Initiatives

LOS ANGELES, Jan. 4, 2011 /PRNewswire/ — As states across the country continue to look for ways to lessen their residents’ impact on the environment, a number of them are looking at the potential of pay-as-you-drive car insurance — also known as PAYD — to reduce traffic and carbon emissions while saving money for a substantial number of policyholders. recommends that consumers ask coverage providers about the availability of PAYD programs in their states and whether using this option could amount to substantial savings.

In PAYD programs, insurers obtain mileage readings from policyholders — rather than estimations of miles traveled in a year — and give discounts if they their mileage is kept below certain thresholds.

Only weeks after California insurance regulators approved the state’s first two PAYD programs, officials in Massachusetts and New York City announced that they are eyeing PAYD initiatives as a way to reduce traffic congestion and pollution.

A PAYD pilot program proposal is included in the Massachusetts Department of Energy and Environmental Affairs “Clean Energy and Climate Plan for 2020.” The report, released last week, estimates that a statewide PAYD system could result in a reduction in vehicle miles traveled that could range from 2 percent to 9.5 percent, depending on the particulars.


The basic logic behind PAYD programs is that when insurance companies offer discounts for having a lower annual mileage, consumers will respond by keeping the total number of miles that they drive to a minimum. Insurers offer the discounts because they consider lower-mileage motorists to be a relatively low risk. This is because the fewer miles that a policyholder puts in behind the wheel, the fewer opportunities he or she has to get into accidents that require the insurer to pay out on claims.

According to a report from the Brookings Institution, 2005 data from Progressive showed that motorists who logged 5,000 miles a year had about half the number of bodily injury claims and less than half the number of property damage claims as those who logged 30,000 miles a year.

To learn more about this and other auto insurance issues, readers can go to where visitors will find informative resource pages and a free-to-use quote-comparison generator that will provide personally tailored rate estimates from a variety of carriers.

Online Auto Insurance, LLC

CONTACT: Ben Zitney of Online Auto Insurance, LLC, +1-909-784-2471,[email protected]

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