How Your Car Emissions Could Affect Car Insurance Rates

Posted in Auto Insurance

January 12th, 2010

On a personal level, doing the best thing for the environment is usually seen as an altruistic act, done without any expectations of a reward. We recycle, reduce and reuse when we can, but almost always because it gives us peace of mind, not because theres a financial incentive involved. Now, however, a conversation is taking place across the car insurance industry that could result in reduced auto insurance rates for people who make a real effort to drive less, and thereby produce less greenhouse gases.

Pay as You Drive

Known as “pay-as-you-drive,” the idea is to encourage people to use their cars less and in return see lowered auto insurance rates. According to the Brookings Institute, if pay-as-you-drive auto insurance were the norm it would lead to an 8% reduction in driving, reduce driving-related damages by $50 to $60 billion, lower harmful car emissions by 2% and lower oil consumption by 4%. Pay-as-you-drive plans are already offered by a few different auto insurance providers, including Progressive, GMAC and Liberty Mutual, but for the most part the idea is a very new one and has yet to become a mainstream auto insurance product. The conversation currently taking place between the auto insurance industry and state auto insurance regulators concerns whether or not to make pay-as-you-drive a mandatory choice for all drivers, and whether or not to impose uniform standards on pay-as-you-drive in order to effect optimal environmental impact.

Technology Requirements

A key component of pay-as-you-drive auto insurance policies is the use of technology to track, monitor and analyze car use behavior. It’s also controversial: while it helps drivers get a very precise picture of how, how much, and where they drive, it also has big “Big Brother” overtones that many people are uncomfortable with. Personal privacy issues aside, the technology is also a stumbling block for the auto insurance industry in that the cost of tracking and analyzing driver data, as well as producing and maintaining the technology itself, could ultimately outweigh its benefits. Nonetheless, pay-as-you-drive is an idea that’s getting a lot of attention for its common sense, low auto insurance rates, and overall environmental friendliness.

Recommendations

Although there are no emissions discounts currently available, it’s still a good idea to try to drive as little as possible. Here are some ways you can curb your emissions production:

• Share a car with your family members. This can help you minimize mileage on your car, save you on gas, save you on auto insurance and encourage you to be as practical as possible when planning excursions.
• Carpool to work. This is one of the best ways for you to make sure you’ll arrive at work on time, and an added bonus is that you’ll get to know your coworkers better.
• Take public transportation. Riding the train or metro to work will allow you to focus on other tasks while you’re traveling to work, such as planning out your day at work or a weekend getaway.