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Enviros, Civil-Liberties Activists at Odds on Mileage-Based Insurance Bill

By Erica C. Barnett February 15, 2011

State Sen. Phil Rockefeller's (D-23, Bainbridge Island) bill that would require insurance companies to provide pay-as-you-drive insurance (the more you drive, the more you pay) or offer a mandatory discount to low-mileage drivers drew predictable opposition at a meeting of the Senate Financial Institutions, Housing, and Insurance Committee this morning. Under the bill, insurance companies would track how many miles a customer drives using a mileage-tracking device on the car and base insurance rates on that data.

Representatives of insurance companies including Farmer's, Pemco, Progressive, and State Farm argued that many companies already offer discounts for low-mileage drivers. Requiring a mandatory discount, they said, would represent unfair interference in the insurance market. Moreover, they said, setting a single standard for tracking mileage might unfairly give companies access to their competitors' proprietary technology.

What no one from the insurance industry mentioned, of course, was that it could eat into companies' bottom lines, as people chose to save money by driving less---much as incentives to save energy lower energy usage, lowering electric companies' profits.

More interesting than the insurers' opposition to the long-shot bill, though, was the disagreement between environmentalists (who like the bill) and civil-liberties proponents (who have concerns).

Carrie Dolwick, the new lobbyist for the Transportation Choices Coalition, said requiring people to pay by the mile "is more equitable because low-mileage drivers no longer have to subsidize high-mileage drivers" and would reduce congestion, greenhouse-gas emissions, crashes, and insurance costs. Currently, low-mileage drivers are like people who order a salad and water at dinner but have to pay the same as the person who ordered steak and Martinis when the bill is split.

The American Civil Liberties Union's Shankar Narayan, however, argued that the bill as proposed would violate drivers' privacy by giving insurance companies too much information about people's exact driving habits. "We'd like to see a bill where the only info an insurance company could obtain is total mileage driven," Narayan said.

In perhaps the oddest argument voiced against the legislation at this morning's hearing, Sen. Don Benton (R-17, Vancouver) pointed out that accidents can happen to cars with or without a driver inside. For example, "A tree could fall on [a car] in the driveway even if it's never driven at all it," Benton said. "It could catch on fire." In that situation, the insurance company would have to pay out just as it would for a high-mileage driver who gets into frequent accidents.

Dolwick said she expects the bill to move out of committee, where senators (including Seattle-area Rep. Margarita Prentice, D-11), but that she doesn't know "whether it will be totally gutted" by that point.
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