Cascadia’s guru on pay-as-you-drive (PAYD) auto insurance and related transportation pricing innovations is Todd Litman of the Victoria Tranport Policy Institute. He provides a useful summary of who’s doing PAYD in his newsletter, which I’ll simply insert below the fold. The growth of PAYD programs is very encouraging, because PAYD is among the most powerful incentives for sound transportation and land-use patterns. There are rumors that a Cascadia locale could be the next place to host a PAYD insurance offering—more on that, if it comes to fruition.

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  • Pay-As-You-Drive (PAYD) refers to converting pricing vehicle insurance and registration into distance-based fees, so motorists pay based on their annual mileage. We consider this one of the most best pricing reforms for improving transportation system efficiency and equity. We have been working to support this concept for several years. Here is news regarding PAYD implementation.

    Aryeh offers PAYD insurance in Israel, billed monthly using mileage data collected by small wireless transmitters in vehicles and receivers at fuel pumps, offered by PAZ (, the country’s largest petroleum company. About 200,000 vehicles (about 15% of all vehicles, and a larger portion of company and government agency cars) already have the device installed for automatic payment.

    Polis Direct Kilometre Policy. Polis Direct, a major Dutch insurance company, began offering their ‘Kilometre Policy’ in November 2004. Per-kilometer premiums are calculated by dividing current premiums by the current policy’s maximum annual kilometers, so a motorist who currently pays x201AxC7xA8500 for up to 20,000 kilometers would pay x201AxC7xA80.025. At the end of the policy term motorists can receive a rebate of up to 50% of their premium for lower mileage, or pay up to 50% higher premiums if they drive more than the current maximum. Mileage data is collected during annual vehicle inspections.

    Norwich-Union PAYD Pilot Project. In 2003, Norwich-Union, the largest insurance group in the UK, began a two-year pilot project of Pay-As-You-Drive insurance pricing involving about 5,000 vehicles. Each participating vehicle is fitted with a small data recorder which measures vehicle usage and automatically reports mileage using mobile telephone technology.

    General Motors and On-Star Offers PAYD Rates. Since mid-2004 the General Motors Acceptance Corporation (GMAC) Insurance has offered mileage-based discounts to OnStar subscribers located in certain states. The system automatically reports vehicle odometer reading at the beginning and end of the policy term to verify vehicle mileage. Motorist who drive less than specified annual mileage receive insurance premium discounts of up to 40%.

    NEDBANK PAY-PER-K Coverage. Nedbank, a major South African insurer, offers ‘Pay-Per-K’ vehicle insurance. Monthly premiums are based on the distance traveled in the preceding month, and are debited monthly in arrears. Mileage is automatically recorded each time the vehicle is refueled using a Nedbank card.

    Progressive and Aviva Programs. The Progressive TripSense and AVIVA Autograph policies offer low-mileage discounts up to 25%, using a small data collection device that motorists plug into their engine diagnostic port. These policies are currently only available in a few areas of the U.S. and Canada.

    Contact Todd Litman to have your name added to a special email news list about PAYD issues.