California Releases New Draft of Pay-As-You-Drive Regulations

August 4, 2009

The California Department of Insurance has released a new draft of the Pay-As-You-Drive (PAYD) regulations, after receiving dozens of comments from consumer groups, the insurance industry and other invested parties, it said.

“After careful consideration of these comments, I have issued revised regulations that will continue to protect the privacy of California drivers while paving the way for insurance companies to offer innovative Pay as You Drive and ‘price per mile ‘insurance,'” Commissioner Steve Poizner said in a statement.

The revised regulations are available at

The pay-as-you-drive program is designed to create an incentive for drivers to drive less and reduce fuel costs and pollution, as insurers offer a new option of calculating insurance premiums based on exact mileage, rather than estimated mileage. Companies can continue to offer traditional insurance based on estimated mileage. However, now they can also offer a verified mileage program instead of or in addition to a traditional estimated mileage program.

Commissioner Poizner originally proposed the PAYD regulations last summer to make a new, more mileage-accurate auto insurance option available for California consumers. The regulations were last revised in June 2009. The revised regulations also allow insurers to offer discounts to drivers who opt to purchase a mileage verification policy. Any auto insurance program, including a pay-as-you-drive program, must be approved by Commissioner Poizner before being placed on the market for consumers to purchase.

If a driver elects to purchase a pay-as-you-drive policy, the insurer would verify the driver’s miles through a variety of methods, including odometer readings taken by the insurer or its agents or vendors, auto repair dealers, smog check stations, self-reporting by the policyholder or a technological device placed in the consumer’s vehicle. The amended regulations explicitly prohibit insurers from gathering location data from consumers for automobile rating purposes through the addition of a technological device. The regulations would not affect existing multipurpose devices such as GM’s Onstar system or the use of a technological device as part of an emergency roadside assistance program.

Public comments on the new changes to the regulations are being accepted until 5 p.m. on August 17. Comments can be e-mailed to: After these procedures are completed, the regulations will take effect as soon as possible, the Commissioner said. Insurers will then be able to apply to offer pay-as-you-drive insurance in California. The regulations are anticipated to take effect in fall 2009.

Source: CDI

Was this article valuable?

Here are more articles you may enjoy.