Washington Considers Pay-As-You-Drive Insurance

By | February 17, 2011

Washington is considering a proposal that would allow drivers’ insurance rates to be based primarily on the number of miles driven per year. Supporters of the pay-as-you-drive bill, Senate Bill 5730, said pricing insurance per mile is more equitable because low-mileage drivers would no longer subsidize high-mileage drivers, and drivers would be incentivized to drive less and save money in insurance, fuel, and vehicle maintenance costs. That subsequently would reduce accidents, congestion and pollution, they say.

The bill also suggests that if an insurer decides not to file a mileage-based rate plan, then it would be required to offer a discount for all motor vehicle liability policies for vehicles that are driven less than 5,000 miles per year.

Insurance Commissioner Mike Kreidler generally supports the PAYD concept, but has said he has concerns on what would happen to the insurance coverage if a vehicle passes the 5,000-mile mark.

Nothing would prohibit insurers from continuing to use other rating factors, such as the age of the driver, gender, location, vehicle type and driving record.

The Property Casualty Insurers Association of America said its members generally support the PAYD concept, according to Nicole Mahrt, public affairs director for the western region. However, her members are concerned that if the bill passes, some of the information filed with the Office of the Insurance Commissioner in rating plans would not be held confidential.

The bill, introduced by Sen. Phil Rockefeller, D-Bainbridge Island, has been referred to Committee on Financial Institutions, Housing & Insurance.

Topics Washington

Was this article valuable?

Here are more articles you may enjoy.