Pay-as-you-drive makes sense for auto insurance

One motorist drives 5,000 miles a year. Another car owner -- same age, gender, driving record, vehicle and neighborhood -- puts in 15,000 miles. Now, why should the first individual pay the same for car insurance as the second? After all, the more miles one drives, the greater the risk of accidents and the greater risk to the insurer who bears the cost.

There's no logical reason for it. That's just the way car insurance has been written. But in 34 states, motorists who drive relatively little can buy insurance at lower premiums that reflect their lower risk. This kind of coverage is called "pay-as-you-drive" auto insurance, and it should be available everywhere.

Insurance companies like it because it helps them better gauge the odds that a customer will get into an accident. But environmentalists also approve of pay-as-you-drive because it rewards people who drive less and gives an incentive for others to cut down on their mileage. The result is reduced emissions of smog and planet-warming gases.

The potential dollar savings are impressive. A retiree near Orlando, Fla., told the Los Angeles Times that he saved $634 a year on insurance for his two vehicles by switching to a pay-as-you-drive policy. Gasoline and insurance are the two biggest expenses of owning a car, and with this kind of insurance, driving less reduces both costs.

In addition to cutting pollution, a nationwide availability of pay-as-you-drive insurance would offer other big payoffs for the society at large, according to a study by the Brookings Institution. Fewer miles driven would mean fewer accidents, less traffic and reduced reliance on foreign oil. Brookings places a value on these benefits at $52 billion a year.

This kind of insurance does raise a privacy concern. How would insurers know your mileage? They aren't about to operate on an honor system, whereby the driver reports the odometer readings.

GMAC Insurance Group tracks mileage recorded on General Motors' OnStar system. Privacy advocates worry that companies could install fancy GPS devices that report not only how many miles are being driven, but where and at what speed.

All this can be worked out, we are sure. And if the program is voluntary, those who object to the surveillance don't have to sign onto it.

California may soon join other states in allowing a pay-as-you-drive option. Unfortunately, pay-as-you-drive still hasn't arrived in New England. We urge insurance regulators in Rhode Island and Massachusetts to encourage this sensible type of coverage. So many drivers in these compact states travel small distances, and there's no reason why they shouldn't benefit from that fact.

(Distributed by Scripps Howard News Service, www.scrippsnews.com.)