New York, NY – City Plans Pay-as-You-Drive Insurance to Get More Cars Off Road

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    New York, NY – Car insurance could be sold by the mile under a plan the Bloomberg administration is floating to get more cars off the Big Apple’s traffic-clogged streets.

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    With “pay as you drive” insurance, motorists agree to install a device in their cars that monitors their mileage and driving habits in order to set rates.

    Such policies have been available around the country for a decade, but not in New York. Yesterday, the city’s Department of Transportation put out a request seeking ideas on how to use “mileage-based insurance pricing signals to trigger change in driver behavior.”

    Under traditional insurance pricing, those who drive the least help subsidize higher-mileage drivers who are more likely to have accidents.

    According to a 2008 study by the Brookings Institution, these incentives could reduce driving by as much as 8 percent, reduce emissions by 2 percent, oil consumption by 4 percent, and provide an average savings of $270 per car.

    “A one-size-fits-all approach doesn’t make a lot of sense when it comes to pricing insurance,” Transportation Commissioner Janette Sadik-Khan told The Post. “Paying based only on how much you drive is a potentially innovative way to make it less expensive for New Yorkers to get around.”

    Sadik-Khan would not say what the agency’s plans are, but according to DOT documents, the goals are to help make the policies available and market them to New Yorkers.

    Earlier this month, Progressive became the first insurance company to receive approval from state regulators to offer usage-based coverage.

    With its Snapshot plan, Progressive customers agree to have their driving habits monitored for six months for such variables as acceleration, hard braking, mileage and time of driving, said Richard Hutchinson, Progressive’s general manager.

    With the chance to save as much as 30 percent on their policies, and zero risk of a rate hike, “people have an incentive to consume less and adjust their driving,” he said.

    Although it isn’t yet available in New York, GMAC offers a pay-as-you-go option around the country utilizing its OnStar system.

    “You must have under 15,000 miles a year, which is 288 miles a week, in order to qualify for their plan,” said Joel Ohman a certified financial planner. “GMAC’s discounts go as low as 54 percent off your total bill if you drive less than 5,000 miles annually.”

    Critics of the programs have expressed concerns about the invasion of privacy that comes with these monitoring devices, said Edmunds.com editor Philip Reed.

    However, he noted, “this could be a money-saver for many people who don’t drive a lot.”

    There are no explicit regulations against the policies in New York, but they each require state approval, insurance officials said.

    Most efforts to keep people out of their cars entail high fees, tolls and taxes. One difference with the “pay as you go” schemes is that a reduction in driving is achieved by saving people money.


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    17 Comments
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    ProminantLawyer
    ProminantLawyer
    13 years ago

    This is good news. I wont pay for the insurance wile my cars stuck in the snow.

    charliehall
    charliehall
    13 years ago

    I’d be very happy to sign up for such a plan if it is offerred.

    DRE53
    DRE53
    13 years ago

    when i applied for a quote for car insurance, i was asked how many miles i put on each year. it happens to be that i only put on approx. 2,000 miles since i live in the city and rarely travel long distance. but i thought to myself: a person putting on 20-30,000 miles per year, why should he disclose it to the underwriter?
    so i’m happy that they want to install a device that’ll trace the mileage used.
    i hope my insurance premium for the next year will drop

    toolee
    toolee
    13 years ago

    what happens when 2 or more are on one policy?

    LiberalismIsADisease
    LiberalismIsADisease
    13 years ago

    Oh yeah, Big Brother and 1984 are coming!!!

    OyGevald
    OyGevald
    13 years ago

    Are you guys so gullible?
    Prices won’t “drop”. What they will do, is raise the frequent drivers to 10x the current rate so in effect if you drive less you’ll pay less.
    Albany already has a similar scheme planned where they will increase the vehicle registration to $2,000.00* a year! And only the smallest cars weighing the least will pay under $500.00 registration. This is an actual proposal sitting in Albany.
    *Dollar figures quoted here are approximate.

    13 years ago

    Hey Mr. Bloomberg, How about taking the unnecessary bike lanes off the road so we’ll have more room for cars on the road.

    MyHumbleOpinion
    MyHumbleOpinion
    13 years ago

    Guys dont get exited, nothing good will come out of all this. Nobody’s insurance rate will go down. Just those who drive more will pay more. and for those which will not agree to install that device their rates will skyrocket. Its just another Obama-care

    I’m sure Bloomberg is already planning how he could get a piece of the pie as well

    ShatzMatz
    ShatzMatz
    13 years ago

    the rate drop is only temporary. much of the cost of insurance is to cover the companies overhead and profit. if people will reduce their cost by driving less, eventually they will have to increase the cost per mile until their revenue equals what they used to get before this idea. a similar thing happened with water rates. in the beginning, when they installed meters people were able to save money by using less water. but when the revenue fell the dep just raised the rate per gallon untill the revenue was back up to its previous level.

    13 years ago

    It is a great scam. They will do it for a year and then watch out. I had this with a day night electrical meter. First year was okay [not great] the second year they made that i had to use almost 80% at night which was impossible and my bill went up

    CountryYossi
    CountryYossi
    13 years ago

    This is a joke…collission shops will figure it all out how to turn those meters back like they do with the mileage when you return a leased vechile….More arrests for Charles Hynes….

    FinVeeNemtMenSeichel
    FinVeeNemtMenSeichel
    13 years ago

    they will eventually monitor your speed, lane changes, and record your conversations.

    13 years ago

    The world has turned upside down. Years ago I filled out an application to, I think it was, TSC because their rates were better than the ones I was paying at the time. They turned me down. Not because of my driving record, which was spotless for more than 25 years. Not because I had any outstanding tickets, because I didn’t. They turned me down because my yearly mileage wasn’t high enough. They said that people who drove as little as I did (which was between 4,000 and 7,000 miles that year) were considered to be risky drivers because we didn’t drive enough.