Pay-as-you-drive insurance: recommendations for implementation

This paper provides guidance for implementing Pay-As-You-Drive (PAYD) vehicle insurance, which directly incorporates mileage as a rate factor. It describes PAYD pricing options, discusses PAYD benefits and costs, describes regulatory reforms, evaluates various objections to PAYD, and provides specific recommendations for PAYD implementation. Various data sources indicate that crash costs increase with annual vehicle mileage. As a result, PAYD increases actuarial accuracy (premiums better reflect a vehicle