Step By Step: Car Insurance for the Driving Reluctant
By Sean Sheehan
At a recent discussion of the Center's Turn the Tide: Nine Actions for the Planet program, I asked participants to name the hardest action. Other than the capstone action of inspiring friends to take the first eight actions, only one made it off the ballot: the first action, skipping a car trip. Not coincidentally, this action has one of the most powerful environmental impacts. The average American driver can save over 1000 pounds of climate-disrupting CO2 each year simply by reducing windshield time ten-percent.
Some people at the meeting reported that public transit didn't exist in their town and that they didn't feel safe biking or walking where they needed to go. A few others reported that they were already very mindful of their oil consumption, almost never took extraneous trips, and thus didn't see an opportunity to skip or combine additional errands.
We talked for a while about how the main obstacles to driving less are tied to our cities' and towns' infrastructures. When the federal government spends four times as much money on highway construction as it does on mass transit, and when many local government policies perpetuate sprawl development, it's little wonder that many people need a car to get wherever they need to go. We talked about how we can influence this year's Capitol Hill debate on the reauthorization of the transportation bill to steer more funds toward bike lanes and transit, and how we can urge our local governments to promote livable communities.
But then a woman in the back stood up. She agreed that our car-dominated infrastructure was a big problem, yet she doubted that bike lanes or improved transit would make a difference, at least for her. After all, a public bus passes by her front door every half-hour and she never rides it. Why would she? She owns a car, figures she's paying several thousand dollars per year in insurance, depreciation and other costs, so why would she pay a buck to ride the bus and leave her car in the garage?
Although she didn't see it as an infrastructural problem, our friend had pinpointed yet another systemic incentive to drive. With most car costs front-loaded, billions in pollution-related costs spread across society, and cheap gas flowing from the pump, we pay a lot to drive but pay very little to drive further.
Car-sharing programs like Zipcar and Flexcar present an alternative to costly car ownership and are great for people who live in cities and only need the occasional use of a vehicle. But what about the vast majority of Americans who own a car?
That's where Pay-As-You-Drive (PAYD) insurance comes in. Contrasted with the prevalent pay-by-the-year structure which might charge you $500 or $1000 per year of coverage, a PAYD plan might charge you 3c or 6c per mile of coverage. Everything else is essentially the same. For example, PAYD policies account for your vehicle type and driving record just as your current plan does.
PAYD is fundamentally about fairness. Each mile that a car is driven has a statistical risk of accident and therefore a financial cost for the insurance company. If you consciously and creatively cut down your annual driving to 10,000 miles, and thus cut down on your risk of a collision, why should you pick up the insurance tab for your risky neighbor who piles up 25,000 miles per year and hasn't set foot on a sidewalk, bike, bus or train for years?
PAYD is also a means of conservation. Through increased financial incentive to limit drive time, the Environmental Protection Agency estimates that PAYD insurance policies would reduce travel, and thus gas use and pollution, by up to fifteen percent.
The problem (you knew it was coming) is that insurance companies don't currently offer PAYD policies. The exciting news (did you know it was coming?) is that the Center has joined with Environmental Defense and other groups and sought out a socially conscious auto insurance broker who can negotiate a PAYD policy as soon as we get a critical mass of people to pledge their willingness to switch to such a plan. Of course, the pledge is completely non-binding and you'll be able to make your ultimate decision once details of costs and coverage are settled.
So what are you waiting for? Take the PAYD pledge today and save money and the environment tomorrow!
Sean Sheehan is National Outreach Director at the Center for a New American Dream.