A Washington State Senator, Phil Rockefeller, a Democrat who represents the people of Bainbridge Island, has introduced a bill that would require car insurance companies to either develop premium rates based on miles driven or offer a discount for people who drive fewer than 5,000 miles per year. Of the bill, Rockefeller said it "would invoke the power of the consumers on the marketplace," according to a report in The E.W. Scripps Co.'s Kitsap Sun newspaper.
Most auto insurance companies offer discounts for drivers who drive fewer than 7,500 miles per year. Is it really reasonable to believe that consumers should save much more on auto insurance by offering another discount for driving 2,500 miles a year less?
For an insurance company to offer this kind of discount under normal circumstances, it would assemble actuarial data to prove to the State Director of Insurance that the number and amount of claims was significantly lower for people who drive fewer than 5,000 miles per year than it was for people who drive fewer than 7,500 miles annually. Also, in order for the insurance company to even take on this task and request this rate, they would have to believe that offering the discount was going to give them a market advantage.
On the other hand, a state senator can force a bill through to make that change with no data whatsoever. He does not have to prove a need for this rate class in the marketplace or provide actuarial proof that a difference in claims frequency and severity exists. I can see how a senator who represents an island community may want to pander to his constituency but I think this idea is truly misguided and will create more problems than it could ever solve. When legislation is substituted for sound business decisions, the results are often disaster.
If you don't drive many miles, search around for an auto insurance company who offers the cheapest car insurance for low-mileage drivers. You may have to submit to annual inspections or install a tracking device to verify your mileage, so make sure that your desire to save money aligns with your sense of privacy. When your commute changes, you stop driving a car every day, or you stop using a vehicle for business, make sure to notify your auto insurance company right away to take advantage of every discount available. Instead of relying on the government, I say let the facts help you get the auto insurance rate you deserve.
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