California residents will now have the option to save money on car insurance simply by driving less, announced state Insurance Commissioner Steve Poizner.
Poizner has approved California's first pay-as-you-drive insurance program, allowing the Automobile Club of Southern California and State Farm to offer lower auto insurance rates to customers who drive under a certain mileage.
State Farm customers will save an estimated $31 million by participating in what the company is calling its Drive Safe and Save program. Beginning on February 28, customers will have the option to purchase the lower mileage plan, where they will receive lower rates by reducing their driving habits by at least 500 miles per year.
Californians who choose the new policy will be expected to either self-report their odometer readings at the beginning and end of each policy period, or allow State Farm to access their mileage data automatically from vehicles with an active On-Star system.
The Auto Club will begin offering its lower mileage program on February 1 and expects participating policyholders to save an average of $68 per vehicle.
The most recent figures available from the Insurance Information Institute found that the cost of auto insurance in California averages about $800 per year.