The Conservation Law Foundation’s efforts to fight air pollution and promote accessible and affordable public transportation have entered the market-based realm of insurance. CLF is advancing a program called Pay-As-You-Drive, which offers a variable, rather than fixed, pricing schedule under which the less you drive the less you pay.

Pay-As-You-Drive insurance increases the transparency of insurance pricing to create an economic incentive for drivers to reduce their mileage. Drivers who reduce their mileage can see incremental cost savings not achieved through the mileage discount currently offered in Massachusetts . Pay-As-You-Drive insurance pricing incentives will lead toe reduced driving which will translate into decreased accident risk, road congestion, and emissions.

If offered in Massachusetts, Pay-As-You-Drive could promote consumer fairness and equality through its pricing structures, while providing economic benefits to insurance companies through reduced claims. The benefits of Pay-As-You-Drive to residents, consumers, insurance companies and the environment in the Commonwealth are extensive (see The State Environmental Resource Center: http://www.serconline.org/payd/talking.html). Reduced miles traveled means less emissions from vehicles. Fewer emissions means better health for residents of Massachusetts and reduced climate change impacts.

Pay-As-You-Drive makes ALL drivers aware of the true costs of vehicle operation, rewards them for minimizing environmental impacts, and may decrease the number of uninsured drivers by offering a cost-effective alternative for low-mileage drivers. Research suggests that decreased driving (or vehicle miles traveled) decreases accident frequency by up to 15 percent.

Pay-As-You–Drive Insurance does not just benefit urban drivers, who currently pay high insurance rates even if their cars are rarely used. Rate differences based on location would stay in effect under a Pay-As-You-Drive Insurance program to take account of risk differences, and all drivers will have the opportunity to save if they drive fewer miles. In addition, the overall cost of insurance is likely to go down under a Pay-As-You-Drive system because with many drivers likely reducing the miles they drive, fewer accidents are likely to occur and fewer claims to be filed. The reduction of the overall cost of insuring the Commonwealth’s drivers will translate into savings across the state.

CLF and our subsidiary, The Environmental Insurance Agency, joined with the Climate Action Network to support legislative and administrative solutions to implement Pay As You Drive Insurance.

Contacts:

Carrie Russell
Staff Attorney, Massachusetts

Advocacy Documents:

• 10/24/07 - CLF Comments on Insurance Regulations (PDF)
• 9/20/07 - CLF Testimony on Auto Insurance Reform (PDF)
• 8/1/07 - CLF Comments to DOI Relative to Mileage-Based Incentives in the Framework of Managed Competition (PDF)
• 4/4/07 - CLF Testimony in Support of H1079 and 1034 (PDF)
• Pay-As-You-Drive Letter of Support
• Bill Coleman testimony, CLF Ventures, Inc.
• Erin Cooke testimony, CLF Ventures, Inc.
• Joe Feirra testimony