California's Rules for Rating on Verified Miles

Plug-in devices and phone apps make people wary, and the first question is usually the right one: what does it record? For the mileage factor, California answers in its rating regulation, 10 CCR 2632.5(c)(2)(F).

Two ways to rate mileage

The standard approach rates each car on an estimate of the miles it will be driven in the next twelve months. The regulation also lets insurers offer an optional verified actual mileage program, in which the rating uses miles that have been checked. Per-mile pricing is permitted inside such a program.

How miles may be verified

The regulation lists the methods: odometer readings taken by the insurer's staff or a vendor, records from a repair shop, smog-check or other government records, odometer readings reported by the insured, technological devices, and other methods the Insurance Commissioner approves. An insurer must make every verification method it offers available to all insureds equally, and may not use a method it does not offer uniformly to the public.

That matters if you dislike devices. If a company offers odometer readings as well as a device, you are entitled to the readings.

What a device may record

An insurer may use a device only to collect the information needed to determine actual miles driven. It may not use it to collect or store information about the location of the vehicle. The exception is narrow: emergency road, theft, map or travel services provided by a motor club or the insurer.

Voluntary, with one wrinkle

An insurer that offers estimated mileage may not require any policyholder to join a verified program. The wrinkle is that an insurer offering verified mileage for one vehicle may require it for all the vehicles on the same policy, so ask before you enrol one car.

The money rules are written to keep programs honest. Any discount must rest on demonstrated cost savings or actuarial accuracy from using actual rather than estimated miles, and if a discount is offered, every participant qualifies whichever verification method they use. Adjustments based on actual miles, backwards or forwards, are allowed only if you were told before the policy's effective date. And an insurer may not require you to produce information from a prior insurer to confirm your mileage.

What to ask before you sign up

• Which verification methods do you offer, and can I use one that isn't a device?
• If I enrol this car, do my other cars have to join?
• How and when will actual miles change my premium?
• What exactly does the device or app collect?

The rule described here governs devices used to verify miles. If a company's program measures anything beyond mileage, ask it to explain in writing what is collected and how it is used. To compare a verified-mileage option with a standard estimate, ask for both quotes.