Back to Press Room

"New Year Ushers in New Law Allowing Texans to Buy Car Insurance by the Mile."

December 29, 2001

Contact: Patrick Butler at (512) 695-5136
Texas National Organization for Women

(AUSTIN) With the arrival of the new year on January 1, 2002, Texas gets a new state law that encourages insurance companies to let car owners buy miles of insurance as needed.  It’s called “cents-per-mile choice” and advocates say it could finally put Texas on the road to making compulsory insurance work.

Insuring all cars was made compulsory two decades ago, despite opposition from auto insurance companies.  Now the companies are saying that the law has failed because the proportion of uninsured cars may be even higher than it was twenty years ago—about one in five cars on the road is without insurance.

But the reason compulsory insurance does not work, according to proponents of “cents-per-mile choice,” is that car owners can only buy insurance at annual rates.  Such rates, they contend, make the insurance like a tax on owning a car—instead of a cost of driving it, which is the activity that produces accidents.  This fixed cost may be resented, they say, but drivers in most areas are able to own their own car and keep it legally insured.

In low-income zip codes, however, studies show that paying for insurance as a cost of ownership forces drivers to share insured cars.  Although sharing cuts individual driving, it causes annual mileage for cars to increase.  Increased mileage sets off a spiral of increased cost to companies, raised rates, and fewer insured cars.  Instead of forcing drivers to share cars, mile rates let them save on insurance the way they save on gasoline—by driving fewer miles.

“We thank the legislature and governor for this opportunity to put forward an alternative way to buy car insurance that is essential to making compulsory insurance work,” said Deborah Bell, president of Texas National Organization for Women (NOW), which lobbied hard to get the new Texas law enacted. Bell said insurance companies owe it to the driving public to explain why they often charge from 50% to 150% more in low-income zip codes.  “No wonder compulsory insurance is not working,” she said.

Patrick Butler, Director of NOW’s Insurance Project, says having a choice between annual and mile rates won’t change the way the car is profiled by car and driver type, and by residence zip code.  “The owner of a car is offered the choice between continuing to pay at an annual rate and buying miles as needed only after the company sets the annual rate and mile rate for the car’s profile group,” Butler explained.  “For example, a buyer might be choosing between $500 per year and 5.0 cents per mile.”

Because the new law lets insurance companies restrict the choice of mile rates to selected customers, Bell is urging Texans to demand that their companies make this choice available to all of their policyholders.

“We need the mile-rate alternative to fixed annual rates that force millions of cars to go uninsured,” Bell said.

Supporters of cents-per-mile choice have developed a web site with more information at

Patrick Butler, Texas NOW Insurance Project - PMB #179, 815-A Brazos Street, Austin, TX 78701; (512) 695-5136
and National Organization for Women, 733 15th Street, NW, 2nd Floor, Washington, DC, 20005; (202) 628-8669


Table of Contents | Odometers | What You Can Do | Compare Rates | FAQ | Press Room | Contact
Copyright 2002 Cents-Per-Mile Texas | All Rights Reserved