Starting January 1st, a new state
law will encourage insurance companies
to let car owners buy miles of insurance
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
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
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
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
"No wonder compulsory
insurance is not working," she
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
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
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,"
Supporters of cents per mile choice have
developed a web site with more
information at www.centspermilenow.org.