California issues final PAYD regulations

California issues final PAYD regulations

Commissioner Poizner originally proposed pay-as-you-drive regulations in September 2008 and revised them last month.

Once the regulations become effective, companies will be able to offer a verified mileage program instead of, or as well as, a traditional estimated mileage program.

The regulations also allow insurers to offer discounts to drivers who opt for a mileage verification policy.

If a driver elects to purchase a pay-as-you-drive policy, the insurer must offer the driver all mileage verification options, which include odometer readings taken by the insurer or its agents or vendors, auto repair dealers, smog check stations, self-reporting by the policyholder or a telematics device placed in the consumer's vehicle.

While the final regulations explicitly prohibit insurers from using telematics technology to gather location data from consumers for automobile rating purposes, this does not affect existing multipurpose devices such as GM's OnStar system or the use of a similar technology as part of an emergency roadside assistance program.

The final regulations will go into effect pending approval by the Office of Administrative Law, which has thirty days to approve the regulations.

As soon as regulations are in effect, which could be as soon as October 2009, insurance companies may submit their PAYD plans to Commissioner Poizner for approval before offering them to consumers.

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