Environmental Defense Applauds "Green Car Insurance" Agreement

The US Environmental Protection Agency (EPA) and Progressive Auto Insurance today signed an agreement to assess the environmental benefits of a “pay-as-you-drive” insurance program promoted by Environmental Defense.

In August of 1998, Progressive Auto Insurance inaugurated a project in Texas which charges drivers for insurance according to the amount of driving they do over a period of time. Rather than fixing auto insurance at one price, consumers have the opportunity to save money when they drive less. Cutting driving miles will also cut auto pollution.

“This new approach could save many drivers hundreds of dollars a year on car insurance while reducing pollution that harms our families and the natural places we love. This provides consumers a financial benefit for protecting the environment, an approach Environmental Defense strongly endorses,” said Michael Replogle, transportation director of Environmental Defense.

Progressive’s voluntary pilot program in Texas bases a large share of auto insurance rates upon when, where, and how much people drive, with less emphasis on more traditional factors such as neighborhood of residence, gender, age, sex and marital status. Consumers are billed monthly for their auto insurance, just as they are billed for telephone service. Drivers who reduce their auto use will pay less for insurance.

“Usage-based auto insurance could significantly affect how people calculate the costs of driving and could improve air quality and congestion as people adjust their driving habits in order to save money on their auto insurance premium. EPA is proud to partner with Progressive in testing this voluntary new approach to auto insurance,” said Rick Farrell, Associate Administrator of EPA’s Office of Policy, Economics, and Innovation.

Thursday’s agreement calls for EPA to explore the environmental benefits of “pay-as-you-drive” and for Progressive to share data on participants’ driving patterns with EPA