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Usage Based Auto Insurance

The insurance companies have come up with a great idea to save you money on your car insurance premiums.  Instead of charging everyone the same price, the companies are talking about charging drivers for the number of miles that are driven.  Since the drivers can't be trusted to admit how many miles are driven the insurance companies have a great device that can be installed in the vehicle.

Some people feel that the intrusion of the insurance company into the driving habits is too much.  The loss of privacy is not worth the reduced premium.  Others are concerned about how much information is actually being tracked by insurance companies.  If companies can identify drivers that are more prone to speeding or reckless driving habits then premiums could be raised on those drivers no matter how many miles they do (or don't) drive each year.

California is taking the usage insurance to a whole new level.  There is a proposition being tossed around that would allow three options for reporting mileage, including the electronic monitoring.  If the proposition passes then insurance companies will have to base auto insurance rates on specific factors.  Mileage would just be one of them.

Usage based auto insurance is a good concept.  The people who drive more miles are typically the ones that end of having more accidents.  The proposition in California that allows consumers to choose how they are monitored will take some of the paranoia out of the possibility that drivers could pay less for driving less.