News: 2010 Press Release
For Release: June 29, 2010
Media Calls Only: 916-492-3566
Commissioner Poizner Announces Second Insurer Applies to Offer Pay-As-You-Drive Auto Insurance, Increasing Options for California Drivers
Insurance Commissioner Poizner announced today that the Automobile Club of Southern California has submitted an application to offer an innovative program that rewards California drivers who voluntarily drive fewer miles with lower auto insurance rates.
"The voluntary pay-as-you-drive initiative is a cutting-edge program that will allow insurers to offer plans based on more accurate mileage, so that people who choose to drive less will pay less for auto insurance," said Commissioner Poizner. "The regulations I finalized last year allow insurers to offer this innovative option without compromising consumer privacy. I'm pleased to see that Auto Club of Southern California plans to offer this kind of coverage to policyholders. I hope other insurers follow suit."
The Auto Club of Southern California is the second 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 the Auto Club of Southern California obtains approval from the Department, its customers will have an option to remain under the current estimated mileage program, in which mileage is estimated by the policyholder and self-reported to the insurer, or they may move into one of two new verified mileage plans: "odometer verified" or "telematics verified."
Customers who opt into the "odometer verified" plan will report their exact mileage to the insurer, as indicated by the odometer. Mileage will be less expensive under the "odometer verified" plan than under the current estimated mileage plan. Customers who opt to participate in the "telematics verified" plan will have their mileage verified through a technological device. Mileage will be less expensive under the "telematics verified" plan than under the "odometer verified" plan.
Additional details on the type of device used in the "telematics verified" plan are not yet available, although CDI regulations explicitly prohibit insurers from using a technological device to gather vehicle location data for rating purposes.
The filing is now under review by the Department of Insurance. This new plan proposed by Auto Club of Southern California must be approved by Commissioner Poizner before being placed on the market for consumers to purchase.
State Farm Mutual Automobile Insurance submitted an application to sell this kind of insurance in May 2010. The filing is currently under review.
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