Pay-As-You-Drive Insurance
Get rewarded for climate-friendly driving habits...drive less, pay less!
A Light Driver
You live close to work and usually walk. Your spouse commutes by bus, and your kids walk to school. The family sedan sits in the driveway much of the time. In fact,you put only 8,000 miles per year on your car.
Your neighbor commutes 40 miles a day on the busiest roads at the busiest times of day and drives about 16,000 miles per year. You own similar cars, are roughly the same age, and pay about the same annual rate for car insurance. Why isn't your rate significantly less? You drive much less and are at much less risk of an accident.
Alternative Insurance
OEC is working with the Environmental Protection Agency, Environmental Defense and others around the country to encourage the auto insurance industry to offer a new product: Pay-As-You-Drive (PAYD) insurance, which better reflects an individual's risk of being in an accident.
OEC is meeting with insurance companies to encourage them to offer PAYD insurance, and we secured a state tax credit during the 2003 Oregon legislative session for companies that offer PAYD insurance.
Read more in this great article from Harper's Magazine!
How PAYD Insurance Works
PAYD insurance converts a portion of your annual fee into a per-mile fee. All existing rating factors (such as your driving history, vehicle type and geographical territory) are incorporated into the per-mile price. Auto insurance companies are expected to offer a range of pay-as-you-drive products, but you would likely pay in advance for a predetermined amount of miles, be required to purchase more miles if you drive more than expected, andreceive a rebate for driving less.
PAYD insurance will give drivers more control over driving expenses and provide a strong financial incentive to drive less. Studies suggest that drivers paying per-mile premiums will reduce driving by about 10% and save up to 25% on their premiums.
Less driving is a great boom to the environment. By driving less, we mitigate our impact on the climate, improve air quality, reduce toxic runoff from roads, and reduce the need to build expensive new road capacity.
PAYD insurance will also reduce automobile accidents. A 10% reduction in driving is estimated to result in a 17% reduction in crashes. PAYD insurance is also a more affordable insurance option. This will benefit lower-income Oregonians, who tend to drive less than middle- and upper-income Oregonians.
