Cents-Per-Mile Rules Allow Insurance
Enforcement, If Companies Cooperate
FOR IMMEDIATE RELEASE
January 18, 2002
Contact: Patrick Butler, Insurance
Texas National Organization for
at (512) 695-5136
Testifying on proposed rules to
implement the “cents-per-mile
choice” law at a hearing before the
Texas Insurance Commissioner, January
22, Texas National Organization for
Women (NOW) urged auto insurance
companies to cooperate with the new law
in order to finally make it possible to
enforce the state’s insurance
requirement for all car owners.
"We thank the legislature,
governor, and insurance commissioner for
this opportunity to put forward an
alternative way to buy car insurance
that is essential to making the
insurance requirement a success,” said
Patrick Butler, testifying on behalf
of Deborah Bell, president of
Texas National Organization for Women,
which provided the analysis on which the
law is based.
Butler 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
cannot be enforced,” he said.
Buying insurance on all cars was made
compulsory two decades ago, despite
opposition from auto insurance
Now the companies are saying that
enforcement 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.
NOW blamed annual rates for impeding
compliance, contending that fixed
rates make auto insurance like an
arbitrary 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
as a financial burden, they say, but
most drivers are able to own their own
car and keep it legally insured.
However, in the low-income zip codes the
Insurance Department terms “under-served”
because insurance is less available at
standard rates, studies show that paying
for insurance as a cost of ownership
forces many drivers to share insured
Although sharing cuts individual
driving, it causes annual miles for cars
to increase. Increased miles per car
sets off a spiral of increased cost to
companies, raised rates, and fewer
Instead of forcing drivers to share
cars, mile rates let us save on
insurance the way we save on
gasoline—by driving fewer miles.
Butler stressed that having a choice
between annual and mile rates won’t
change the way companies profile cars by
use, driver type, residence zip code and
“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,” he explained.
“For example, a buyer might be
choosing between $500 a year and 5.0
cents a mile.”
Enforcement is greatly simplified by
including the odometer limit to the
miles bought in advance on the car’s
insurance ID card.
An odometer check verifies
With annual rates, the ID card
only shows the policy period, but not
whether insurance has been cancelled
through non-payment. This necessitates a time-consuming check with the agent or
company for verification.
Because the new law lets insurance
companies restrict the choice of mile
rates to selected customers, NOW 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,” Butler said.
Supporters of cents-per-mile choice have
developed a web site with more
information at www.centspermilenow.org.