Golden State Wants Environmentally-Friendly Auto Insurance

California, long having led the rest of the nation with its environmental and health concerns, now wants its drivers to promote the health of Planet Earth as they pay for car insurance.

Yesterday, Steve Poizner, head of the California Department of Insurance, announced his intentions to give Californians the opportunity to opt for new, green “pay-as-you-go” auto insurance by autumn of 2008, if possible.

This new system will be made possible by new legislation that the California Department of Insurance plans to enact in the fall. Presently, the law demands that auto insurance providers charge their policyholders set annual rates based on how many miles the policyholders are expected to drive over the course of one year. California’s new laws will permit insurers to charge their customers, instead, for however many miles the customers actually drive, based on odometer measurements.

Paying auto insurance for every mile they drive will cause motorists to take their cars only on essential errands. No more driving that SUV five blocks to the grocery store. Californians are likely to be induced  to start walking or biking to friends’ houses to reduce their auto insurance costs.

These trends are expected to yield great positive results for the environment, according to the Environmental Defense Fund. The Fund has predicted that California’s carbon dioxide emissions will decrease by 55 million tons between 2009 and 2020, if only 30% of the state’s drivers elect to participate in pay-as-you-go auto insurance programs. Moreover, this reduction in driving from 30% of Californians will preserve approximately 5.5 billion gallons of gas and save car owners and insurance companies alike about $40 billion total in automotive repairs.

Opponents of the pay-as-you-go system have expressed concerns that insurance providers will put devices intended to track customers’ mileage to other uses, potentially violating their policyholders’ privacy in their quest for profits. However, the Department of Insurance intends to forbid insurers from using the tracking technology for such ends as, for example, determining where and when their customers drive.

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