State Farm Mutual Automobile Insurance Co. is the first insurer to submit an application to the California Department of Insurance to offer a program that rewards drivers who voluntarily drive fewer miles with lower auto insurance rates.
“It’s just common sense that Californians who choose to drive less should have an option to pay less for auto insurance,” said Commissioner Poizner. “The voluntary pay-as-you-drive initiative is a cutting-edge program that will allow insurers to offer these plans without compromising consumer privacy. I hope other insurers follow suit and join State Farm in offering this product.”
State Farm is the first insurer to submit a rating plan in which drivers’ auto insurance rates will depend on actual mileage driven instead of estimated mileage. The new approach to rating has been made possible by the pay-as-you-drive regulations introduced by Commissioner Poizner. The regulations went into effect in October 2009.
Assuming that State Farm obtains approval from the Department, State Farm customers will have an option to move into the new verified mileage plan, which State Farm has labeled its “Drive Safe and Save” program. Those who enroll will be given an initial discount for joining the program.
Drivers who choose to purchase this policy will then be rated based upon the actual annual miles they have driven. Under the proposed program, consumers who reduce their driving habits by as little as 500 miles per year will see a reduction in their rates.
The filing is now under review by the Department of Insurance. This new plan proposed by State Farm must be approved by Commissioner Poizner before being placed on the market for consumers to purchase.
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