Car Insurance – an incentive to drive?

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The B.C. Sustainable Energy Association (BCSEA) has as one of it’s platform items, mileage based insurance. The idea is that car insurance would be based upon the annual mileage that each vehicle is driven. As it is now, car insurance is often the largest or one of the largest costs in owning a vehicle and it doesn’t matter whether you drive 1000 km per year or 100,000 km per year the cost is the same (I realize there are business and drive to work categories but they don’t make a huge difference in price in most cases).

My family has one fuel efficient vehicle. We use it when there are no other options but at times it is far cheaper to use the vehicle (when there are 2 or more occupants) than to use the City transit system. One of the reasons is that no matter whether we use the car or not it costs us about $2.65 per day for insurance. This is even worse for a young person just starting out as the insurance cost is in the area of $4.40 (and much higher if they own a new vehicle) per day.

If insurance was based upon annual mileage then owners and operators would have more incentive to keep the mileage down as they would save on fuel, maintenance and insurance costs. This would provide encouragement towards making short trips on foot or on a bicycle and planning trips to reduce the mileage (and insurance costs).

One of the objections to the above is that it is subject to fraud. Vehicle leases are based on mileage and fraud isn’t a huge problem.

Such an insurance scheme would require changes but I cannot see why it would not work to give a revenue neutral and more fair insurance system. It may even help to improve health, reduce pollution and reduce congestion on roads.

John.

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