Insurance companies on the cutting edge of “rate making” are considering a new way of charging drivers for their car insurance -by charging you based on the number of miles you drive every year.

Now insurance companies already rate you differently if you go over a certain number of miles per year, but it’s based on asking the customer how much they drive every year (and we all know how truthful we are to our insurance companies). So now with improvements in technology, some insurers are looking into actually attaching a device to your vehicle that records the amount of miles you drive and will therefore charge you accordingly.

Now I’m sure this will be proven to be some kind of invasion of privacy if ever enacted, but I think there are some big positives with setting up this kind of rating model. Firstly, it is a fact that drivers who drive more are more likely to be involved in a car accident, in comparison to drivers who drive less. This would correctly and fairly charge drivers who are using their “auto insurance” by driving and charge less to the drivers who are not using their car insurance. So their is a cost savings that would benefit some drivers.

Secondly, environmentalist (and capitalist?) would argue that this type of pricing would also provide an economic incentive not to drive as much. If people are not driving as much because they are going to have to suffer higher car insurance rates than there would be less pollution caused by cars. However, the economic ramifications of this should be thought truly as their may be some unintended consequences such as say, less driving to vacation spots.

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