This study investigates the feasibility, benefits and costs of implementing distance-based motor vehicle insurance. It is based on a literature review, analysis of insurance claim data, comparisons of different distance-based pricing options, and evaluation of concerns that have been raised about distance-based pricing. Vehicle insurance is a significant portion of total vehicle costs. A typical motorist spends almost as much on insurance as on fuel. Insurance is generally considered a fixed cost with respect to vehicle use. A reduction in mileage does not usually provide a comparable reduction in insurance premiums. Research described in this report indicates that within existing price categories, annual claims increase with annual vehicle mileage,.
