Distance-based insurance reflects the principle that prices should be based on costs. It gives consumers a new way to save money by returning to individual motorists the insurance cost savings that result when they drive less. Motorists who continue their current mileage would be no worse off on average then they are now (excepting any additional transaction costs), while those who reduce their mileage save money. Distance-based pricing can help achieve several public policy goals including actuarial accuracy, equity, affordability, road safety, consumer savings and choice. It helps reduce traffic congestion, road and parking facility cost savings, and environmental impacts. It can reduce the need for cross-subsidies currently.
