Cutting Emissions…With Car Insurance?

The “Pay As You Drive” approach to auto coverage could save some drivers money–and cut lots of CO2, studies say.

Los Angeles traffic (Photo: Gabriel Bouys)

Most car insurance is priced in the United States kind of like an all-you-can-eat salad bar, says Justin Horner, a transportation analyst at the Natural Resources Defense Council. You pay a set amount once or twice a year, and then you can eat one little salad, or you can totally chow down, making several trips back for more food, piles of cole slaw and jello threatening to topple from your over-filled plate. Either way, it makes no difference to your wallet.

And, of course, regardless of hunger level, it can be kind of tempting to go back again and again, just because you can.

On the other hand, if you get your salad at one of those pay-by-weight places, you’re likely to be a lot more discriminating about what’s on your plate. That’s how we buy gas, says Horner.

And, according to a study by the Brookings Institution, a non-partisan think tank, that’s also how we should be buying our car insurance.

“Just as an all-you-can-eat restaurant encourages more eating, all-you-can-drive insurance pricing encourages more driving,” states the report. “That means more accidents, congestion, carbon emissions, local pollution, and dependence on oil.”

According to the study, if car insurance premiums were priced per mile driven, driving would decrease nationwide by eight percent (it would take a $1 per gallon increase in the price of gas to achieve this kind of reduction). This would:

- Decrease carbon emissions by 2%

- Decrease oil consumption by 4%

- Save $50-$60 billion in reduced “driving-related harms”

In California alone, the study finds that an eight percent decrease in driving would account for between seven-and-nine percent of the total CO2 reductions needed to meet the states mandated levels for 2020.

In another study, professors at the Massachusetts Institute of Technology found that if all Massachusetts drivers switched to car insurance priced by the mile, fuel consumption would go down 9.5%, cutting two million tons of CO2 emissions.

You can listen online to Gretchen’s companion radio report to this post at The California Report. You can see and hear our entire series, Miles to Go, at our special coverage page.

  • http://www.autoasig.ro/ asigurari rca

    It seems fair enough to cut out your expenses for a car insurance. Earlier i read an article about cost per mile insurance and i like the idea. Now after this article i think that insurance companies would not want to loose money, it is not in they’re interest. Of course that for us,, drives and for environment would be great to pay money for an insurance proportional with the miles we drive.

  • ben

    in the piece, didn’t it say that state farm offers this? i couldn’t find it on their site

  • Gretchen

    Hi Ben,
    The specific name of the State Farm pay-as-you-drive program is called “Drive Safe & Save.” There are other insurers in California offering pay-as-you-drive-type plans, too, including the Automobile Club of Southern California.
    Gretchen

  • ben

    thanks gretchen!