The proposal centers on a simple idea: infrequent drivers are less of an insurance risk. By pricing policies according to the mileage driven, insurance companies can offer discounts to lower-risk infrequent drivers, and put an appropriate cost penalty on heavy drivers. The state estimates that 30% adoption of PAYD insurance nationwide would reduce miles driven by at least 10% among subscribers, and save 55 million tons of CO2 over the next ten years. The benefits of such a system could be quite dramatic, as California Insurance Commissioner Steve Poizner is sure to emphasize.
The Electronic Frontier Foundation has detailed (pdf) privacy problems with the bill.
[W]e are very concerned about the possibility of the unregulated use of a “technological device” to collect the veriﬁed actual mileage. Many possible implementations of this technology could pose serious threats to the “location privacy” of drivers, and we believe it is essential to impose careful and serious protections in the amended regulations. […]
For one thing, we believe that it is unacceptable for insurance companies to be permitted to coercively require customers to accept such devices in their cars: it is essential that the proposed regulations be amended to permit drivers to participate in the veriﬁed actual mileage program via other means (e.g., reporting mileage to their insurance agent, sending in a photograph, etc.).
EFF also notes that the California Department of Insurance “has presented no empirical, factual basis in the administrative record to justify its decision to permit either the use of veriﬁed actual mileage or the use of any technology beyond a simple odometer for verifying actual mileage.”
Recall that in March, in an interview, Transportation Secretary Ray LaHood suggested the idea of taxing drivers based on their mileage, which would require the tracking of individual drivers through technology such as GPS. White House press secretary Robert Gibbs quickly announced that such a tracking and taxing plan “is not and will not be the policy of the Obama administration.”