Lower Auto Insurance
“Hit Up for High Premiums” (Business Day, Aug. 23) reports that auto insurance premiums are rising even though Americans are responding to higher gas prices by driving less, which means fewer accidents and thus fewer insurance claims.
If auto insurance premiums were priced per mile driven rather than as a lump sum per year, drivers would automatically see insurance costs decline when they drive less and would not have to rely on insurance companies to respond to reduced driving with lower premiums.
According to our most recent research, such pay-as-you-drive auto insurance pricing would save two-thirds of households money on auto insurance, with an average savings for those households of $270 per car.
The system would also give drivers incentives to drive less, which would mean reduced accidents, congestion, carbon emission, oil dependence and pollution — benefits we estimate to be between $50 billion and $60 billion per year.
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Tags: Auto Insurance