Operation of an Audited-Mile/Year Auto Insurance System Under Pennsylvania Law

This review examines the practical implications for insurance companies and Pennsylvania car owners of converting most automobile insurance coverages from year to mile class rates. The purpose is to provide a framework for evaluating legislation mandating this conversion from one-part to two-part pricing: from time rates only to a system using both distance rates and time rates. The legislation, which has been introduced in the Pennsylvania Senate and House and is under consideration in other states, would add one sentence to the state's Casualty and Surety Rate Regulatory Act: The exposure units for calculation of private passenger automobile insurance premiums at the appropriate classification rates should be the mile by audited odometer readings for driving coverages and the year for nondrying coverages. Keywords: Auto Liability, Expenses, Exposure Bases