Wash. Senator Wants to Give Greater Weight to Mileage in Car Insurance Pricing

State Senator Phil Rockefeller

Sen. Phil Rockefeller has introduced legislation that would require car insurance companies to give low-mileage discounts.

A Washington state senator has introduced a bill that at least would require premium discounts to be given to low-mileage drivers and at most would allow auto insurance companies to issue policies at a per-mile rate.

Sen. Phil Rockefeller introduced the new legislation because Washington law does not currently require insurers to give discounts to drivers who put in low numbers of miles behind the wheel. In addition, the motor vehicle insurance code does not yet address how mileage-based policies should be regulated.

The new bill would change all that.

If the legislation is passed, it would authorize state regulators to “develop and implement a mileage-based insurance demonstration project” in order to provide insight into the different approaches to mileage-based coverage. The commissioner would also be authorized to produce and institute standards that would be used for these types of programs.

This would in theory pave the way for insurers in the state to institute their own mileage-based plans, and any companies failing to do so by July 2012 would be required to give premium discounts to policyholders who drive fewer than 5,000 miles a year.

That July 2012 timeline may prove to be a little tight, though. In California it took years of development before the state’s final legal regulations for pay-as-you-drive policies were set in place.

One hurdle to developing effective regulation of a mileage-based option is the provision of the bill that would allow such coverage plans to be sold in mileage increments rather than in policy periods.

The only insurer that uses a similar method is a Texas auto insurance company called MileMeter, which sells six-month policies in which policyholders purchase between 1,000- and 6,000-mile bundles at a time.

The introduction of Rockefeller’s bill reflects a growing national trend in which lawmakers are advocating for greater availability of pay-as-you-drive programs, which are touted as win-wins because of their potential to cut down on congestion and pollution while also saving money for some consumers.

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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