California Environmental Groups Support Mileage-Based Car Insurance

Sacramento, CA (AHN) - Insurance firms and environmental groups based in California are pushing for a mileage-based car insurance policy in which drivers are charged based on actual miles traveled.

Lower premiums are one benefit of the policy, which is already available from a limited number of insurers in 34 states. The GMAC Insurance Group estimates their client's premiums have gone down from 13 to 54 percent.

Aside from savings on premiums, the pay-as-you-drive policy reduces driving cost, helps the environment and decongests the streets.

If all states adopt this type of car insurance policy, it could save the U.S. $52 billion a year due to fewer accidents, reduced traffic and pollution and cut the country's reliance on foreign oil, according to a study by the Brookings Institution.

To allow pay-as-you-drive types of insurance policies in the state, California Assemblyman Jared Huffman authored bill AB 2800 permitting the mileage-based insurance policy to be sold.

GMAC already has 30,000 pay-as-you-drive policy holders across the nation. A second insurer, Progressive Corporation, said 33 percent of their new clients volunteered to try the mileage-based offer on a pilot testing program in Minnesota, Michigan and Oregon.

Meanwhile, another California lawmaker has proposed a different method of tackling high fuel prices by setting a national speed limit of 60 mph for freeways in urban zones and 65 mph in areas with less dense populations.

In the 1970s during the first round of the oil price increase initiated by the OPEC, the U.S. Congress and then-President Richard Nixon mandated a 55 mph national speed limit. The law was repealed in 1995.