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
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
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
This fixed cost may be resented,
they say, but drivers in most areas are
able to own their own car and keep it
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
“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 www.centspermilenow.org.
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)