Idea #3: Make Car Insurance Green and Fair

Idea #3: Make Car Insurance Green and Fair
by: Rob Annandale

With transportation accounting for 40 per cent of air pollution province wide, the time has come for car insurance to move beyond simply promoting safe driving habits and to start rewarding good environmental behaviour, according to a UBC research team.

Enter the hybrid distance-based auto insurance rates (HDB rates for the purposes of this article). A made-in-B.C. solution, it combines two kinds of green insurance -- one based on mileage, the other on fuel efficiency -- while trying to avoid the pitfalls of either scheme taken on its own.

"It seems like a plan, as far as we can see, where nobody gets hurt and where we are incentivizing the right behaviour," according to physicist Lorne Whitehead who leads the UBC team along with planning expert Lawrence Frank.

Regular pay-as-you-drive rates involve higher fees for those who spend more time on the road. But that logic can end up hurting lower-income individuals unable to reduce their driving. For example, a single parent who ferries the kids around and commutes from the suburbs each day is bound to log a lot of highway miles and may be hard-pressed to pay any resulting financial penalties.

Likewise, insurance plans that nail those who drive gas-guzzling vehicles could punish a retired couple who drive their 30-year-old Cadillac once or twice a week.

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