State Farm First Insurer to Apply to Offer Californians Pay-As-You-Go

May 26, 2010

State Farm Mutual Automobile Insurance the first insurer to submit an application to offer an program that rewards California drivers who voluntarily drive fewer miles with lower auto insurance rates.

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 pay-as-you-drive regulations went into effect in October 2009.

Assuming that State Farm obtains approval from the state insurance 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 must be approved by the state before being placed on the market for consumers to purchase.

Insurance Commissioner Steven Poizner said he hopes other insurers will follow State Farm in offering the product.

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