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Auto insurance and usage-based insurance in California


Perhaps it's something in the water but, every time you look at California, there's a new political campaign claiming an infringement of citizens' rights to privacy. A while back, it was an attack on red light cameras that collect evidence of the drivers committing offenses. Naturally, people objected to the state knowing the time and place of their passing. Who needs deterrents to improve driving standards? The latest hot potato is the move to introduce usage-based auto insurance. This is a simple offer to drivers. Prove you're a safe driver and the insurance company will reward you with a reduced premium rate. There's no mandate, no law to force anyone to fit the technology to their own vehicles. Yet the very idea an insurer is tracking any of their policyholders is enough to get everyone steamed up. No matter what the drivers may think, this is an intrusion too far.

For the record, the insurance industry has announced reassuring figures showing some 70% of the drivers who have sacrificed their privacy have earned a discount. It seems the vast majority of drivers are safe and earn a reward. But the Californian advocates point out the information collected could be used to penalize drivers unfairly. Suppose, for example, your job requires you to be on the roads at night . This is considered a high risk time to drive so you would be denied a discount. Similarly, if you used a multistory carpark in an area with a "bad" ZIP code, you might find your discount reduced or removed. These objections are significant because California represents about 13% of the national market for auto insurance. If the local Insurance Commissioner imposes limits, this would seriously damage the development of a national market. At present, Proposition 103 of 1989 restricts insurers to the collecting the total number of miles covered. No other data as to the way the vehicle is driven or where it's driven can be collected. Unless the Californian lawmakers repeal the Proposition, usage-based insurance cannot succeed in California. As with many things, this makes California unique.