Melissa Gannon
Regardless of how insurers choose to apply the payment structure, miles driven must be verified.
Verifying mileage is where critics step in. Consumer WatchDog, a California advocacy group, vehemently opposes a bill currently in the California legislature that would give consumers the option of applying a monitor to their car to track mileage under a PAYD system. In a June 11 letter from the group to Jared Huffman, the state assemblyman sponsoring the bill, the group refers to the monitor as "spyware" and says that, while the bill purports to lower rates for drivers who lower their mileage, in reality it "lets companies charge lower rates to customers who install a spyware device in their car (and higher rates to those who don't), even if the driver makes no progress in reducing their actual miles driven." The watchdog group also claims that the monitor is an invasion of privacy, given that insurers could collect much more information than just mileage. This includes things like how aggressively you drive, acceleration and braking rates, average speed, time of day you are driving, and the location of the car at all times. One could see how this starts to feel a bit too "Big Brother." But an electronic monitor such as the one proposed in California is not the only way mileage can be verified. Again, according to the Victoria Transport Policy Institute, mileage data can be collected in other ways. The simplest way is to have vehicle owners report mileage by mail or email with random verification checks. Another approach is similar to how electricity is metered and audited. The odometer would be checked by a certified business at the time the policy is up for renewal while, at the same time, the auditor would then check for indications of tampering and odometer accuracy. As with many public initiatives, most people can agree that the broad goal of the PAYD system is good for consumers, the environment, and economic equity. It's the implementation and the potential distortion of its use that consumers need to pay attention to. TheStreet.com Ratings issues financial strength ratings on nearly 1,000 auto insurers. These are available free of charge on the Insurance Ratings Screener.
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