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"New State Law Will Let Texans Buy Car Insurance By the Mile"

November 12, 2001

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

(AUSTIN)  Starting January 1st, a new state law will encourage insurance companies to let car owners buy miles of insurance as needed.  It's called "cents-per-mile choice" and it could finally put Texas on the road to making compulsory car insurance work.

Two decades ago, despite opposition from insurance companies, compulsory car insurance was adopted in Texas.  Since then, penalties for noncompliance have been increased and proof-of-insurance requirements have been enacted.  But company representatives say the proportion of uninsured cars may be even higher than it was before insurance was made compulsory-about one in five cars now on the road are without insurance.

The major problem according to proponents of the "cents per mile now" project is that car insurance can only be bought at fixed rates.  Such rates they contend make insurance like a tax on owning a car instead of a cost of driving it, the activity that produces accidents.  This fixed cost may be resented, they say, but it's affordable in most zip codes.

However, studies show that in the low income zip codes, making insurance a fixed cost of owning a car forces drivers to put more miles on fewer cars-causing the average miles per insured car to spiral upward, and insurance rates to skyrocket.

"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 Texas law enacted. "We challenge the companies to try to explain why they oppose compulsory insurance."

Bell also said insurance companies owe it to the driving public to explain why they often charge from 50% to 150% more for car insurance in low income zip codes.  "No wonder compulsory insurance is not working," she said.

Dr. Patrick Butler, Director of NOW's Insurance Project, says having a choice of payment options won't change the way your car is profiled.

"A company assigns the car to one of the company rate categories by profiling your zip code, car type and use, household drivers, your credit history, and other information they have access to. The choice of continuing to pay at a fixed rate or buying miles as needed is offered only after the company sets the rate," Butler explained.

He gave this example:  "Say that your company's going rate for cars in your profile group is $500 per year, and the average mileage for the group is about 10,000 miles per year.  (Companies get mileages from periodic Government studies that determine the averages according to driver and car profiles.)  Then the company would give you the choice of paying the going rate or buying miles at the group's average cost of 5.0 cents
per mile.  Choosing to buy 2,000 miles of insurance protection-to be added to the car's current odometer mileage-would cost you $100 plus a nominal expense fee.  Before these miles were all driven, you would have to buy more miles to stay legally insured."

The new law lets insurance companies restrict availability of the cents-per-mile choice to selected customers.  Bell is urging Texans to demand that their companies make this choice available to all of their policyholders.

"We need the per-mile alternative to dollars-per-year prices 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


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