State Farm Files First Pay-As-You-Drive Plan in California


The Insurance Journal is reporting that State Farm Mutual Automobile Insurance Co. has submitted the first application of offer a pay-as-you-drive program in the State of California. Such programs reward drivers who have low mileage with reduced car insurance rates.

California approved pay-as-you-drive regulations last October, but State Farm is the first insurer to submit a rating plan where motorists’ insurance rates will be based on actual mileage driven rather than estimated mileage. If the state insurance department approves the proposal, customers of State Farm will have the option to switch to the new verified mileage plan, which the insurer is calling “Drive Safe and Save.”

Policyholders who choose to purchase this type of auto insurance coverage would then be rated based on the actual number of miles they drive annually, and customers who reduce their driving habits by even 500 miles a year will benefit from the switch.

The filing must be approved by the State of California before being placed on the market for consumers to purchase. Steve Poizner, California Insurance Commissioner, said that he hopes other insurance companies will follow State Farm’s lead in offering such a program.

The filing must be approved by the state before being placed on the market for consumers to purchase.

Insurance Commissioner Steven Poizner said he hopes other insurers will follow State Farm in offering the product.

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