Drive less miles and get a discount, that’s the general idea behind pay-as-you-drive car insurance. With insurance agencies offering different versions of this type of plan, commuter students who know the importance of research might find that doing their homework pays off.

Most students are familiar with good student discount incentives, however usage-based car insurance has nothing to do with grade point average. Instead discounts are calculated on the number of miles a student actually drives, and the fewer the better.
In December 2010, California’s Department of Insurance approved the states first ever pay-as-you-drive car insurance program, and only two agencies are approved to offer programs in California: State Farm’s “Drive Safe & Save,” and AAA’s “Verified mileage discount” program.

These programs are not created equal, however, since there are no state-standardized criteria. The discounts and terms vary, depending on the insurer, as do the mileage brackets.

“There are no standardized criteria other than what are allowed by the regulations,” said Ioannis Kazanis, press secretary to California’s Department of Insurance Commissioner Dave Jones. “To make the program worthwhile, an insurer has to already have, or needs to adopt, fairly narrow mileage bands so that there is an incentive for the insured to drive less and save money. But there are several options for how the mileage data is collected and how the process begins.”

State Farm offers drivers the option of installing an odometer-reading device in the car. The device cannot be used to collect information on where the car is located, or where it’s going however.

“(Department of Insurance) regulations doesn’t allow us to get tracking information,” said Bob Devereux, a spokesman for State Farm. “The only information we can get is the odometer reading, nothing more. That was intended to alleviate those privacy concerns.”
For insurers like AAA odometer readings are self-reported, for now.

“We’re going to trust that they’re giving us the exact number, and that’s it,” said Jeffrey Spring, AAA’s spokesman for Southern California.

Consistently, however, insurers are hesitant to penalize drivers outright for going out of their mileage bracket. Drivers might find, instead, that they are put into a higher mileage bracket, which affects the discount.

Yet the discount incentive might be enough to get some students to research the fine print, and change their driving habits.

“I’d want more information about it,” said Brian Santiago, a 19-year-old junior who has been driving for three years and pays $130 per month in insurance. “But I would probably drive less miles if there was a discount.”  And, according to Devereux, getting all the information is the first step.

“Do your research and make sure you understand the intricacies of it,” he said. “And then go talk to an agent. Don’t just do it online.”