Implementable Strategies for Shifting to Direct Usage-Based Charges for Transportation Funding (2009)

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108 improvement projects that reflect government priorities. For further information, see Kossak (2003), Rothengatter (2004), Rothengatter & Doll (2002), and Ruidisch (2004). The United Kingdom proposal. Several years ago the United Kingdom planned to develop a weight-distance truck tolling program, though to date it has not been implemented. The plan called for varying fees according to distance traveled, type of vehicle (weight, number of axles, and emissions class), and type of road. In subsequent years, the fee basis would be expanded to include time of day (to reflect congestion costs) and geographic area (to reflect, for example, the high costs that trucks can impose on residential areas) as well. The technology to support the toll would be based on an on-board unit that includes GPS (to determine both distance and road type), cellular (to communicate with the central billing authority), and a link to the vehicle’s tachograph (to provide a backup check on distance traveled). The motivation for the fee was to ensure that foreign haulers who purchase their fuel abroad before arriving in the UK are forced to pay their share for road use. Because the focus of the new program was not on increasing fees on domestic truckers, but rather leveling the playing field, the proposal reportedly enjoyed a significant degree of political popularity in the U.K. For further information, see Worsley (2004). The Oregon electronic weight-distance truck toll payment concept. Oregon is currently the only state to rely exclusively on weight-distance tolls for trucks (the three other states with weight-distance fees also levy diesel fuel taxes). Oregon has looked at a concept in which trucks would be outfitted with GPS systems that capture information about mileage traveled within pre- identified zones based on GIS maps. At the end of each month, data would upload wirelessly to a central billing center. Truck weights and number of axles would be factored in with the mileage data to determine road use charges, as with the current manual reporting system. Trucking companies could either receive a paper statement or manage payment online. For more information, see Witty and Svadlenak (2009). A.3. Pay-As-You-Drive Insurance Massachusetts. Massachusetts introduced competitively priced auto insurance in April 2008; previously, rates had been set by the state. Insurance companies can now offer discounts for low mileage: 10 percent discount for driving between 0 and 5,000 miles annually, and a 5 percent discount for mileage between 5,000 and 7,500. Mileage is verified by the Massachusetts Registry of Motor Vehicles. For more information, see Bingham (2009) and Boston Consumer’s Checkbook (undated). GMAC. In 34 states, drivers of GM vehicles equipped with OnStar GPS systems can sign up for mileage-based discounts. Discounts are based on mileage bands; for example, drivers who drive 5,000 to 7,500 miles per year receive a 34 percent discount over the standard premium they would otherwise pay, while those who drive 7,500 to 10,000 miles could receive a 26 percent discount. The mileage is calculated by the vehicle diagnostics system; location of driving is not used to calculate the premium. For more information, see OnStar (2007). MileMeter. This Texas firm offers PAYD with the cost per mile based on the driver’s age, vehicle, and location. All miles driven carry the same cost. The driver purchases a six-month policy for a specific number of miles from 1,000 to 6,000; the policy ends when either the six- month mark is reached or the driver has driven the number of miles purchased. MileMeter does

109 not track the number of miles driven; if a claim is filed, it is matched against the policy validity, and the policy is not valid if the odometer reads over the specified number. For more information, see MileMeter (undated). Progressive Insurance. Progressive offers PAYD in ten states, under a program called MyRate. Pricing is based on distance driven but also takes into account the time of day (miles driven during peak hours and after midnight are more expensive than at other times of day) and sudden starts and stops. Drivers receive a discount on their next policy renewal. Discounts currently go up to 25 percent; drivers are also subject to a nine-percent surcharge if they are deemed more risky based on their driving habits. Mileage, time of day, and driving habits are tracked with an ODB device that transmits data wirelessly to Progressive at the end of each trip. For more information, see Donohue (2008) and Progressive Insurance (undated). Aviva (Canada). Aviva has a pilot program called Autograph offering PAYD insurance in the province of Ontario. Much like Progressive Insurance, from whom it licenses the technology, Aviva offers discounts based on distance driven, time of day, and speed; distance is the most important in terms of calculating the discount. While the maximum discount possible is 35 percent, and the lowest 5 percent (Aviva does not raise rates based on high mileage), the average discount is around 20 percent. The OBD II device that records the data requires the driver to take the device out, upload the data to a computer, and send it to Aviva. Aviva plans to move to wireless transmittal of data in the future. For more information, see Bettencourt (2005) and Insurance-Canada (2005). Note that Aviva also offers PAYD in France and Turkey, but further information was not readily available in English. Coverbox (United Kingdom). Coverbox (owned by Wunelli Limited) offers PAYD insurance with costs based on distance and time of day driven (off-peak, peak, and “super-peak” periods). The per-kilometer cost is calculated for each driver; as Coverbox functions as a broker, drives can choose between quotes. Drivers estimate when they take out a policy the number of kilometers they think they will drive. They can either pay monthly, like a utility bill, or pay the whole premium up front and be credited or debited at the end of the premium period for any difference from their estimate. Kilometers are tracked by the Coverbox, a GPS unit produced by Cobra that must be professionally installed and offers anti-theft protection. For more information, see CoverBox (undated). Hollard Insurance (South Africa). As with the Real Insurance program in Australia, Hollard offers PAYD insurance with a two-part fee, fixed and variable. However, the customer receives a monthly bill for the number of kilometers driven, much like a utility bill. The variable fee is applied for monthly distances driven between 417 and 3,200 km (259 to 1,988 miles) per month. All kilometers are charged at a flat rate, which is calculated separately for each driver. Kilometers are measured by a GPS device called Skytrax, produced by the firm Tracker and professionally installed. Skytrax offers roadside assistance and theft tracking. For more information, see Hollard Insurance (undated). Nedbank (South Africa). Hollard Insurance also underwrites an insurance policy called “Pay per K.” Drivers pay on a monthly basis with a flat fee per kilometer driven. Distance is measured based on odometer readings, which are captured with a NedFleet card that drivers use to

110 purchase fuel. For more information, see NedBank (undated). Real Insurance (Australia). Real Insurance’s PAYD program operates with a two-part fee. Drivers pay a fixed fee per month (legal liability coverage) and a variable fee based on distance driven (comprehensive coverage). The initial purchase must cover at least 5,000 km, which can be rolled to the following period if the driver travels fewer kilometers. All miles are charged at the same rate. Real Insurance verifies mileage when claims are filed, and a claim can be refused if the odometer shows more kilometers than last purchased. The liability coverage remains in place even if the comprehensive coverage has run out. For more information, see Pay As You Drive (undated).