'Pay as you drive' car insurance proposed: The American Association for the Advancement of Science

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The Independent Online
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CAR OWNERS should pay for insurance according to the distance they drive as an incentive to save energy, cut emissions and ease traffic congestion.

Delegates heard about a radical pay-as-you-drive scheme under which drivers pay for insurance at the petrol pump, as and when they need it.

Such a scheme could cut the number of miles people drive by between 5 and 14 per cent in the short term and 16 to 41 per cent in the long term, according to Mohamed El-Gasseir, a researcher at a San Francisco-based company, Rumla. The system is designed to reduce the tendency for people to use their cars whenever they can, believing they must get the best possible value for their insurance premium.

Mr El-Gasseir told the conference: 'By paying for insurance incrementally and at the time it is needed, we will be more sensitive to the actual cost of personal transportation. Energy consumption will be reduced because we will drive less and we will use more efficient vehicles.'

He said car insurance should consist of two components - a direct payment to an insurance company, and a charge payable at the fuel pump. The first would still vary according to the risks the insurance companies associated with different groups of motorists and vehicles.

The pump payment would go into a central fund, with the interest earned used to help lower insurance premiums. A side-effect would be fewer cars on the road, thus fewer accidents, Mr El- Gasseir argued.

People who drove without insurance would be forced to contribute to the central fund through buying fuel.