Car culture is one of the big obstacles in the transition to a lower carbon future. Dangerous climate change can’t be stopped without breaking the addiction to fossil fuel motoring – but it’s easier said than done. Cars are hugely convenient, many people can’t get by without them, and they’re a real status symbol as well. We’re deeply attached to our cars.
So here’s one way to help reduce emissions from cars without necessarily giving up driving altogether: pay as you go car insurance.
At the moment, we pay a flat annual fee for car insurance. Once we’ve paid for the year, it doesn’t matter if we drive sixty miles every day to work, or just take the car out occasionally at the weekend. It all costs the same. In fact, since we’ve paid for more miles, we might as well drive more. It would be poor value otherwise. It’s the same logic as an all-you-can-eat buffet.
If, on the other hand, you paid according to your annual mileage, you’d have a reason to think twice before you drive anywhere. You’d be more inclined to walk, especially shorter trips. Perhaps you’d stop doing the school run by car. For some people it might be just the extra incentive to get back on the bike.
I came late to driving, and I only learned to drive when our second child was born. I mainly got my license so I could help out with long journeys, and generally use the car once a fortnight or so. We’ve set up our life so that we don’t need to drive, so it struck me as a little strange that I have to pay a flat fee. Obviously people who drive more are likely to be more experienced. But equally the likelihood of being in an accident goes up the longer you spend on the road. So I feel like I am paying a price based on an average level of risk, when I ought to fall below it. It’s a price structure that serves the insurance companies rather than me as a customer. A pay as you go option would make more sense for someone like me, and I’d happily fit a black box to keep tabs on mileage.
Until recently, no such option was available, but this year two new services arrive on the market in the UK: Cuvva is up and running, and Just Miles is imminent. Both offer mobile phone based insurance for occasional trips. ‘Stop paying for miles you don’t drive’ says the latter. It’s great that the option is now on the table, though you’d have to tell your insurer every time you drive the car. Surely it would be possible to create something in between, where the price you paid was based on your annual mileage? I nominate Dale Vince at Ecotricity to look into this and add car insurance to their growing portfolio of environmentally minded businesses.
These two start-ups are targeting their offer at people who don’t drive often and who would like to save money. I’m interested in how the idea could be used to lower emissions, because every mile not driven is a tiny slice off that huge burden of transport CO2. It wouldn’t be a massive reduction, but if it encouraged people to walk or cycle more it would have additional benefits for our health and our communities, and it would reduce congestion for other motorists. It sounds to me like an idea worth investigating.
Has anyone else looked into it? I can only find one study from California in 2008. It estimates an 8% reduction in car use, delivering 7-9% of the emissions reductions on the state’s carbon targets. Two thirds of drivers would have lower premiums, so everybody wins.
Everybody except the insurance companies that is, and that’s why new companies or socially aware businesses will have to take this on. It’s unlikely to come from the industry.
I’m writing from a UK perspective. I wouldn’t be at all surprised if someone informs me that it’s all pay as you go where they are, so please let me know if this is more common in your country. And if you can see an obvious flaw in the plan, feel free to point that out too!