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Vehicle Insurance Benefits for Those Who Drive Less

Insurance Commissioner Steve Poizner and Assemblyman Jared Huffman (D-San Rafael) announced draft regulations on "pay-as-you-drive" insurance today that are intended to reward those who drive fewer miles each year, a requirement in California under insurance reform initiative Proposition 103.

"Regulations that implement Proposition 103's mandate that insurance rates reflect a driver's mileage will lower auto insurance premiums, particularly when the high cost of gasoline is encouraging people to drive less," said Harvey Rosenfield, the author of Proposition 103 and founder of Consumer Watchdog. "They will also give consumers a financial incentive to carpool and promote mass transit and other transportation technologies that can reduce the impact of driving on our environment and our costly reliance on oil. Assembly Member Jared Huffman's attention to this important issue, along with other organizations, led to today's announcement. We also applaud Commissioner Poizner's prompt action in drafting the proposed regulations."

California voters approved Prop 103 twenty years ago, and required that annual miles driven be the second-most important factor in setting auto insurance premiums (the first is driving safety record). Consumer Watchdog fought the insurance industry in court and at the Department of Insurance for eighteen years to uphold that mandate. Regulations finally enacted in 2006 required all California auto insurance companies to cease basing auto premiums primarily upon ZIP Code and phase in the good driver system so that they fully comply with the law by July 14, 2008. The Department of Insurance is currently reviewing the compliance plans filed by insurance companies in July.

Consumer Watchdog Will Seek "Environmental Seal of Approval" for Insurance Company Plans

Consumer Watchdog, the leading advocacy group on insurance matters before the Department of Insurance, said it will be an active advocate in the Department hearings on the proposed regulations in the months to come. The group said it will seek reduced rates for low-mileage drivers, ensure that rates are consistent and fair and that drivers' privacy is protected, and urge the Department of Insurance to establish an "Environmental Seal of Approval" to encourage insurers to closely tie mileage reductions to cheaper insurance rates.

"Lawmakers and regulators have stepped up to the plate to help Californians 'green' their insurance policies and save people money," said Carmen Balber, an advocate at Consumer Watchdog. "Now insurance companies must do their part by giving drivers real savings when they drive less."

AB 2800, legislation authored by Assembly Member Huffman and backed by Environmental Defense Fund, the Natural Resources Defense Council and insurance lobbying groups, initiated the attention that led to today's announcement of the proposed "pay as you drive" regulations. The legislation has been withdrawn.

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