Pay-as-you-drive insurance—a new way for families to save money on car insurance and a new incentive for low-oil, climate-friendly transportation—is finally coming to Cascadia!
As the Seattle Post-Intelligencer reported yesterday, the US Department of Transportation has committed the remaining funding needed to start a $6 million ground test of pay-as-you-drive car insurance in Washington.
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Here’s the background: In 1995, Sightline (then Northwest Environment Watch) commissioned the first research on the subject of PAYD (or mileage-based) insurance from Victoria Transport Policy Institute’s Todd Litman. Todd went on to become one of the concept’s leading developers, and Sightline has been promoting the concept in countless ways ever since. A few years ago, we helped win passage in Oregon of a tax credit for insurers willing to write by-the-mile policies. As of yet, no insurers have taken the bait.
For the past three years, in cooperation with a coalition of organizations organized by Bill Roach (of King County Metro until his recent retirement), we’ve been trying to get a pilot project launched in Washington. (Bill is a Cascadian hero who helped create two other game-changing transportation innovations earlier in his career: Flexcar and U-PASS. It’s been an epic journey, but we’ve finally reached our destination. And the eventual payoff could be big—from more affordable insurance for low-income residents to making a dent in King County’s contribution to climate change.
Where can you sign up? Well, with the insurance company Unigard, but not for a few months. (Please post a comment below if you’re interested in signing up! Sightline will announce when Unigard begins sign ups.)
And don’t expect by-the-mile savings just yet. To calibrate as-you-drive rates, the pilot is designed to gather data for three full years before a commercial product is marketed.
This go-slow approach is, of course, frustrating, considering how long we’ve all been waiting and how large the potential benefits are. But I served on the committee that evaluated the many proposals from insurers to work on this pilot, and I can say that Unigard’s plan makes excellent sense. In the long run, it’s worth it to gather the data needed to satisfy actuaries and regulators first.
It also makes sense to test the privacy and reliability of the technology systems to be used (the system will gather data on vehicle miles with GPS). Privacy is a key to public acceptance. Within a few years’ time, Unigard will be able to make pay-as-you-drive a mainstream offering. And, in the meantime, others in the insurance industry aren’t standing still. They’re developing their own pay-as-you-drive plans.
Please post a comment below if you’re interested in signing up for pay-as-you-drive insurance in Washington.