City of Vancouver wants ICBC to adopt 'pay as you drive' auto-insurance rates
Those who drive more would pay more

John Bermingham and Elaine O'Connor
The Province

April 27, 2005

The City of Vancouver wants a "pay as you drive" car insurance system in B.C.

Vancouver City Council unanimously passed a motion yesterday to pressure the Insurance Corporation of B.C. to offer insurance based on a per-kilometre rate.

Currently, auto insurance is paid on a flat-rate basis, with no incentive to drive less.

Coun. David Cadman said long-distance commuters are on the road longer, and at greater risk of an accident.

"They're the risk, they're driving more kilometres," he said.

"That's how it should be paid, not on the basis of a flat rate."

"It would have the effect of someone saying, 'I don't need to drive my car today. I'm driving 40 kilometres. It's going to cost me X amount. I'll take the bus.'"

Cadman proposed that ICBC could initially offer the insurance voluntarily, and the 20 per cent of drivers who use cars the least will probably sign up in a snap.

"So you shift some of the costs on to the other 80 per cent," said Cadman, who drives three days and takes transit the rest.

A number of councillors heard of the idea at a TransLink workshop last month. They were told that in Bellingham, Wash., 20 per cent of vehicle trips are for commuting, with 72 per cent of trips for education, shopping or leisure purposes.

ICBC would need to inspect the vehicle and set an insurance rate based on the mileage on the odometer.

Coun. Peter Ladner, who makes three car trips a week and cycles and takes transit the rest of the time, said it's about fairness.

"The more you drive, the more chance you're going to have an accident, so the more you should pay for insurance," he said.

Ladner said people who drive once or twice a week would pay much less for insurance.

"They think a lot about that trip, and they only take it if they have to. And you end up reducing the number of trips taken," he said.

"Right now, you pay it all up front, and so there's an incentive to get out and use up the value you've already spent."

Coun. Anne Roberts said user-pay auto insurance has reduced mileage by between 10 and 30 per cent wherever it's been adopted.

ICBC spokesman Doug Henderson declined to comment, calling it a political issue.

Todd Litman of the Victoria Transport Policy Institute has been advocating for the system for years.

"If we do this, it means that people will have an incentive to

drive less," said the transportation economist. "And if they drive less, there will be fewer crashes and there'll be fewer payoffs. And that's exactly what we as a society want: We've just made the roads safer."

Price-per-kilometre would be pro-rated based on the driver's existing insurance bracket so high-risk drivers paying more per kilometre would have even more incentive to reduce their driving.

Motorists were enthusiastic. "I think it's a great idea. It makes people who live close to the city drive less," said Byron Dowler of Deep Cove as he filled up at a Vancouver gas bar.

"If it would save me money, I'd probably do it," said Don Brooks of North Vancouver.

Pay-as-you-drive programs or pilot projects are operating in Oregon, Israel, Britain, Holland, South Africa and Australia. General Motors' On-Star and Aviva in Ontario offer similar programs.

jbermingham@png.canwest.com

eoconnor@png.canwest.com

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© The Vancouver Province 2005

Sounds good - but I wonder what the threshold would be where you match the rate you would have paid for a flate rate. I wouldn't want to pay more just because I took a long road trip to the States.

wow. I was just thinking of this. I vote yes on the condition that it is only optional. People who live in urban area's might only want to drive once or twice a week, but some people in BC have no option of using transit. The max amount you would be charged shouldn't be more then the flate rate that you qualify for.

I dont like it, what if you want to go out of town, and your destination is very far, you are going for a good/different purpose, your not going to be clogging up the highways/streets of the lower mainland. I think mainly downtown is their focus obviously, just increase the price for pay parking. What about people coming from such areas as Maple Ridge, or South Delta/Ladner, i doubt they want to stay on a bus that will take much longer to get to where they want to go(primarily downtown), a personal vehicle is and always will be the first choice for the majority of Vancouverites.

It's not meant as a deterrant to driving - it's meant for a fairer allocation of risk. Those who drive most are more likely to get into accidents, so they should pay more. Insurance costs are allocated based on risk - that's why the insurance for a sports car is higher - higher risk drivers?
Think of it more as a user fee allocation. i.e. Like metering water versus the flat rate we use now.

a personal vehicle is and always will be the first choice for the majority of Vancouverites.

Not if planning is done right. With Vancouver's warm climate, transit friendly neighbourhoods are definitely possible to achieve.

I think mainly downtown is their focus obviously, just increase the price for pay parking.

Downtown only? It is beneficial to everyone that doesn't have to drive a lot, and people near transit are set to benefit the most.

I think this proposed policy should only be enforced to areas that do have easy access to rapid transit(aka those that live within easy access of the skytrain and rav lines). All other areas of the Lower Mainland must not be punished for driving because they simply don't have a viable transit option.

I tend to disagree with officedweller's assumption that the more you drive, the more risk you are to have an accident. If you drive more, you get more experience, hence why the current system is fine the way it is(e.g. discounts for clean driving records, surcharge for bad driving records). Plus if you are in an occupation that requires driving (e.g. salesman, courier), I would think you would have the incentive to drive even more careful since your livelihood is dependent on your safe driving record.