February 22, 2004

By: Yoshi Kamota
Website: http://www.1st-in-cars.com

PAY-AS-YOU-DRIVE Insurance Bill Heads To House Floor

Today the House Revenue Committee sent House Bill 2043, the Pay-As-You-Drive insurance bill, to the House floor with a do pass recommendation. HB 2043 would provide a tax credit to auto insurance companies that offer mileage-based auto insurance premiums, prompting companies to provide this insurance option to Oregonians at an accelerated pace.

Companies will be able to take advantage of the tax credit beginning in the 2005 tax year. Under PAYD insurance, drivers pay a per-mile rate instead of a fixed yearly rate for car insurance. This per-mile rate incorporates all traditional risk factors, such as crash history, vehicle type, and geographic territory. Auto use is determined through periodic audited odometer readings or with advanced technology. Drivers are charged monthly, or provided a rebate on their annual or six-month premium for miles not driven.

PAYD insurance rewards motorists for curbing driving. Studies indicate that PAYD insurance will result in a 10% reduction in annual mileage and even larger reductions in accidents. In addition, less driving improves our air and water quality, reduces congestion, mitigates our impact on the climate, and saves precious resources from being spent on costly and environmentally damaging road building projects. PAYD insurance can be offered as a customer option.

An analogy is long-distance telephone service where companies offer a variety of payment options, from unlimited calling plans to per-minute calling plans. Consumers choose what best fits their lifestyle.

HB 2043 is a low-cost, high-leverage proposal, said Lynn Lundquist, president of the Oregon Business Association. A successful test of mileage-based insurance here in Oregon will promote greater equity in the auto insurance market and help us with our pressing transportation and environmental problems.

About The Author:

Yoshi Kamota is a successful author and regular contributor to http://www.1st-in-cars.com.  Great car accessories and parts plus financing, insurance and leasing tips.