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"New Cents-Per-Mile Rules Allow Insurance Enforcement, If Companies Cooperate "

January 18, 2002
Contact: Patrick Butler, Insurance Project Director,
Texas National Organization for Women, at (512) 695-5136

(AUSTIN) 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 companies.  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 cars.  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 insured cars.

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 other criteria. “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 insurance.  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


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