I saw 'pay per mile insurance' in the interview with Ian and Barry but nowhere else, so here goes:
This has been done. I live in British Columbia, Canada, where the publicly owned non-profit Insurance Corporation of BC has an automobile insurance monopoly. We have stable, reasonable rates, and few uninsured motorists.
When ICBC was started in 1974 by the New Democratic Party (democratic socialist) government, a tax of 10 cents per gallon was added to gasoline prices, and paid directly to the insurance company, which used the proceeds to reduce annual driver premiums.
It was a great idea - drive less, pay less. Drive a small car that's less likely to damage something, pay less. It was a form of 'carbon tax' which reduced gasoline use and therefore greenhouse gas emissions and climate change.
However, it was not long before we had a more conservative government which dropped this gasoline tax and ordered ICBC to switch to collecting all insurance revenues through annual premiums.
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By linking the insurance premium to your gasoline purchases, I can see how you "pay-per-mile". Barring that, how would this work? Would I have to stop by the agents office periodically so she could check my odometer? Would I have to have a black-box type device installed that wirelessly communicated my milage? This insurance would have to apply on a per-car basis as opposed to a per-person basis so that I couldn't use my grandmother's car for the cheap rate while driving my car to work every day.
The same linkage is missing for the small car/low gas use/minimal damage idea. The small car/high milage link is missing if only the milage itself rather than the gallons used determine the premium. Each make of car would have some scoring applied to the premium based on it's weight, engine, style, etc.
About 10 to 12 years ago in South Africa primary auto insurance was optional, but each motorist had to take out a kind of compulsory insurance (called balance of 3rd party). This insurance covered personal injury and death benefits to people other than the primary parties involved in a collision (passengers, bystanders). People used to buy this once a year, and had to display a round sticker on the inside of the windshield.
Anyway, in a country where more than half the populace consisted of low-income households, the system was often misused. Some folks would steal these stickers, falsify them, or simply drive without them. To overcome this deficiency, a gas tax was issued to cover the premiums. People still had to display the stickers, but now could obtain these for free from their favorite insurance company. All claims were combined to determine the percentage of claims going to each insurance company, and the pool of money gathered from the gas tax were then divided according to that same percentage.
As far as I know, this effort was very successful, and is still in use today.
I don't know....I'm pretty sure at 38 with one accident ever (not my fault) I'm still less likely to be involved in an accident driving 1000 miles than a new teenaged driver driving 20 mile. I'd be in favor as long as my per mile rate is much, much lower.
I think I remember that the idea was floated in (California?) some years ago- an "insurance tax" would be added to the price of gasoline. The assumption was that more miles equaled more gas used, which is about reasonable.
One would still have to pay an insurance company to handle the paperwork; they would be allowed to charge an annual fee, like $25 or so.
Drivers who had no claims during the year would receive a rebate based on the amount of surplus tax collected by the state, that is, what was left over in the insurance fund after all claims were paid off. (I think they called it something other than a tax.)
I think the biggest objectioon I heard was that it would discriminate against the economically disadvantaged, who couldn't afford to buy newer, more efficient vehicles.
I like the idea, it would virtually eliminate uninsured drivers.
I don't know....I'm pretty sure at 38 with one accident ever (not my fault) I'm still less likely to be involved in an accident... — swilli28, Apr 25 2004
However, once you're 65 and your're part of the age group that causes more fatal accidents than every other (non-teen) age range, this will suddenly become an unsatisfactory idea. AARP would never allow this. Remember, driving is a privilege if you're under 18. The older you are, the more of a birthright it is. Once you're a senior citizen, you have to pry those cars out of their cold, dead, bony hands. So what if the people dining in the local coffee shop are taken out when you mistake the gas for the break!
"I'd be in favor as long as my per mile rate is much, much lower."
— swilli28, Apr 25 2004
"Drivers who had no claims during the year would receive a rebate based on the amount of surplus tax collected by the state, that is, what was left over in the insurance fund after all claims were paid off. (I think they called it something other than a tax.)
Some car policies already limit the annual miles which may be put on a car, mainly certain expensive sports cars. They also specify the night time parking arrangements - alarm, sprinkler, etc