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California to allow pay-as-you-go insurance

California has announced regulations that may save car owners money on their insurance premiums for reduced mileage.

Most drivers know that they can save money on increasingly high gas prices by cutting down on the miles they drive, but California insurance commissioner Steve Poizner has announced regulations that may save car owners money on their insurance premiums for reduced mileage.

Poizner original proposed the legislation last year which would allow insurance companies in California to offer "pay-as-you-drive" (PAYD) options for drivers. The programs would allow consumers to prepay for a number of miles they expect to drive in a given time, with their premium reflecting the mileage selected.

The new options would give California drivers more options while potentially saving them money and reducing pollution associated with automobiles.

"These regulations expand insurance options for consumers, allowing a freer market to create incentives for driving less," he said. "By empowering consumers to take charge of their insurance bill, we may see fewer cars on the road; which means cleaner air, safer streets and lower premiums."

PAYD is becoming more popular with legislators around the country as a number of states have made the option available for drivers. Earlier this month Colorado joined Texas and Nevada as some of the most recent states to permit PAYD.

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Posted: June 30, 2009