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    Los Angeles Times: State considers pay-as-you-drive auto insurance

    The Los Angeles Times reports on a California proposal about auto insurance. The bill, AB 2800, says it "would provide that in determining the number of miles an insured drives, an insurer may apply different rating factors for voluntary insurance-verified annual mileage and applicant-estimated annual mileage."

    An alliance of insurance companies and environmentalists wants to bring a new kind of mileage-based auto insurance to California and charge motorists only for the number of miles actually driven.

    Called pay as you drive, the option is available from a few insurers in 34 states — but not California — as well as Canada, Japan and Europe. […]

    But privacy advocates worry that companies might install sophisticated GPS devices on cars that would communicate via satellite where and when motorists travel and whether they are speeding or driving recklessly. […]

    Insurance experts suggest that privacy concerns may have been the undoing of a pay-as-you-drive product launched two years ago by Britain’s largest auto insurance company, Norwich Union. In June the company canceled its program after only 10,000 customers signed up.

    The Electronic Frontier Foundation has analyzed this bill and other such "pay as you drive" schemes.

    The problem with these proposals is that they are often accompanied by a technical proposal for a tracking device that sits in your car and transmits voluminous data over wireless or satellite links, so that insurance companies can decide how much to charge you. Many modern vehicles are already collecting this information, and the insurance industry just needs to get a copy of it. […]

    Briefly, EFF’s view is that there is a perfectly good, ubiquitous and tamper-resistant device avaialable for measuring vehicle mileage: the odometer. It may be good policy to require fine-grained dependence of insurance premiums upon mileage — but if so, the data should be collected by examining odometers rather than 24/7 wireless or satellite surveillance.

    EFF’s blog post on the issue is here; the organization’s comments to the California Department of Insurance (which held a workshop on the issue) is here (pdf).

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