More mileage means higher insurance

SACRAMENTO, Calif. Your car insurance rates are partly based on how many miles you tell your insurance company you drive each year.

"I try to under estimate. So hopefully, it'll be less!" said Martha Hildago of San Bruno.

However, recently finalized regulations allow insurance companies to apply more emphasis on how much you drive with Pay as You Drive policies, which will be cheaper if you don't drive as much.

The Verified Miles Plan means your insurance agent, an auto shop or a GPS-like device reads your odometer.

The Pre-Paid Plan allows you to buy miles in bulk, say coverage for 25,000 miles, instead of for a period of time.

"If we can put financial incentives in place to encourage drivers in California to drive less, then we can reduce the total number of miles driven in California. That will reduce accident rates, it'll reduce insurance rates and it'll help clean up the environment," said California Insurance Commissioner Steve Poizner.

The Environmental Defense Fund estimates if 30 percent of Californians participate in the Pay as You Drive coverage, the state could avoid 55 million tons of greenhouse gas emission through 2020.

The new plans are optional, and traditional auto insurance will still be available.

"I go to school and live in the same area. My commute is ten miles. So for me, it'll be phenomenal," said Mark Tarshis of Walnut Creek.

"I drove a lot. I'm a musician. I'm a photographer. I go to school pretty far. I don't know. I'd like to stick with my normal insurance," said Myron Mahroo of Whittier.

If the insurance company opts for a GPS-like reading device, it's not allowed to use other information from it to increase your rates.

But be forewarned, because the industry wants to change that.

"Where a car is driven, what time of day a car is driven and how a car is driven are good indicators of whether or not a person will be engaged in an accident," explained Sam Sorich of the Association of California Insurance Companies.

Insurance companies must now submit their policy details to the state for approval and could begin selling them by early January.

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