California issues final PAYD regulations

08 Sep 2009

Steve Poizner, California's Insurance Commissioner, has issued final pay-as-you-drive regulations that will enable insurers to offer vehicle insurance rates based on actual miles driven as opposed to estimated miles driven.

Commissioner Poizner originally proposed pay-as-you-drive regulations in September 2008 and revised them last month. Companies will be able to offer a verified mileage program, when the regulations become effective. Insurers will also be allowed to offer discounts to drivers who opt for a mileage verification policy. For drivers who elect to purchase a pay-as-you-drive policy, the insurer must offer the driver all mileage verification options, which include odometer readings taken by the insurer or its agents or vendors, auto repair dealers, smog check stations, self-reporting by the policyholder or a telematics device placed in the consumer's vehicle. Explicitly prohibiting insurers from using telematics technology to gather location data from consumers for automobile rating purposes, the final regulations do not affect existing multipurpose devices such as GM's OnStar system or the use of a similar technology as part of an emergency roadside assistance program.

The final pay-as-you-drive regulations will go into effect pending approval by the Office of Administrative Law, which has thirty days to approve the regulations.
As soon as regulations are in effect, which could be as soon as October 2009, insurance companies may submit their PAYD plans to Commissioner Poizner for approval before offering them to consumers.