Automobiles

The New York Times entertained the way Driver’s Insurance is calculated and its impact on polar opposite drivers. The read by itself is worth it but I enjoyed that they were actively promoting and exchanging an idea that had never crossed my mind.

As a driver, I understand and can relate to most of the claims and reasoning brought up by the article. It offered a new perspective on how to view drivers . . . since we are not all equal. That is to say . . . we do not all drive the same amount of miles yet we all practically pay the same cost to insure the same makes and models of cars that we drive.

Our current Automobile Insurance system does not take into account the difference in mileage consumption of various drivers. The only way they organize policyholders is by those that get into accidents, those that get moving vehicle violations (aka tickets) and the rest of us that do not get either. The solution some have offered is pay-as-you-drive insurance or PAYD.

Progressive Insurance is the first major carrier that will attempt change the system with their plan MyRate. It will not do away with their current setup but it will offer those drivers that do not drive as much a different purchasing opportunity. Progressive’s MyRate will require drivers to “install a small wireless device in their cars that transmits to Progressive not just how many miles they drive but also when those miles are driven and, to some extent, how they are driven: the device measures the car’s speed every second, from which Progressive can derive acceleration and braking behavior.” This in turn will help Progressive categorize individuals into respective groups where ideally they will offer lower cost saving plans to individuals that meet those characteristics.

Easy right? Well, at least we are heading in a direction that is beneficial to all drivers a whole. There are kinks in the plan as with any initiative. As a recent former college student, I would commute from Austin to Houston on various occasions over those 4 years. How will drivers that drive longer distances per episode be different from those that drive longer distances as a whole? Will there be different perks for those that drive X amount of miles without a violation or accident? Would the prices be substantially lower then current insurance plans? Will Americans embrace this type of insurance policy? Who knows? We do know of the impact it can potentially have though. Drivers will be proactive on their driving habits. They will have an incentive to carpool and organize their errands based on their driving habits. It is this impact on our society and environment that supercedes any gains drivers may receive monetarily.

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