I received a form from my car insurance company asking for the odometer
readings of our 3 cars.

My concern is that this is not going to be representative of our future
driving distance. My wife's car has a lot of mileage because she was
finishing college two years ago, and she had to drive 35 miles each way. So
she has a lot of mileage on her relatively new car, but since she finished
school she doesn't drive much; her work is now within 10 miles of home.

If the insurance company takes the odometer reading and divides it by the
number of years since the car was purchased, then this will not accurately
predict how much she will drive this year.

If I don't return the odometer form, are they going to give us the
opportunity to provide maintenance records from the past year, or
documentation showing the distance of her current work location from home?

Because using the odometer reading doesn't make sense... that makes too
many assumptions and people don't always drive the same amount from
year-to-year. This is the very first time they would have our odometer
readings so I can only assume that they would average it over all the years
since the car was purchased.

------

California Considering New Mileage Verification Rules
May 31, 2006

Insurance brokers and agents could be required to verify odometer readings
for new and renewal automobile insurance policies under amendments the
California Department of Insurance (CDI) has proposed to its personal
automobile rating factor regulations.

CDI has proposed amending Section 2632.5, of the California Code of
Regulations, to specify how insurers may-and may not-verify estimated annual
mileage. Under Prop. 103, annual mileage is second in importance only to
driving safety record in the weight insurers may assign in establishing
personal auto insurance rates.

Under the CDI proposal, new applicants would be required to estimate their
annual mileage and provide insurers "reasonable information necessary to
support the estimate." "Reasonable information" would be defined to mean,
"the location of the applicant's workplace if the vehicle is used for
commute purposes, the number of days per week the vehicle is used for
commuting, an estimate of the number of miles driven for pleasure or other
purposes, the approximate total number of miles driven the previous year,
and the reason for any differences in the estimate for the upcoming year and
the miles driven the previous year."

Insurers would be permitted to require applicants to provide their current
odometer reading, or to obtain the last odometer reading from the California
Department of Motor Vehicles smog certification program.

The proposed regulation further states, however, that "If an insurer markets
using an independent or captive agency system, and an applicant meets with
an agent in connection with the insurance application, the insurer may
require the agent to verify the odometer reading of the vehicle to be
insured under the policy, and the applicant shall allow the agent to do so."

If an applicant fails to provide or permit an agent to verify the odometer
reading, if the insurer has no other means reasonably to estimate annual
mileage, and if the insurer has clearly indicated the consequences of not
providing that information, the insurer may issue the policy using a
"default annual mileage figure, which has been filed with and approved by
the Commissioner."

Insurers would be prohibited from changing the mileage estimate provided
without notifying the applicant of that change and providing at least 15
days from mailing that notice, to challenge the insurer's determination
under the proposed regulations. Insurers could request, but not require, an
applicant to provide prior documentation, such as prior vehicle maintenance
records or prior smog certificates. Insurers could not require an applicant
to provide information from a prior insurer to confirm mileage estimated or
driven.

A conference call workshop was held May 25, in which insurers argued for
greater flexibility in deciding whether and how frequently to request
documentation for mileage estimates. IBA West will be providing testimony on
the proposal at a public hearing, June 13, at CDI offices in San Francisco
at 45 Fremont Street.

A copy of the proposed regulations appears below:

STATE OF CALIFORNIA
DEPARTMENT OF INSURANCE
45 Fremont Street, 21st Floor
San Francisco, CA 94105
RH06091489 April 14, 2006
PROPOSED REGULATION TEXT1
Mileage Verification
Section 2632.5 Rating Factors.

(c) An insurer's class plan, and all rates and premiums determined in
accordance therewith, shall utilize the following rating factors (the
"Mandatory Factors") for bodily injury liability, property damage liability,
medical payments, uninsured motorist, collision, and comprehensive
coverages:

(1) ....
(2) "Second Mandatory Factor" as used in Subchapter 4.7, is the number of
miles he or she drives annually, per California Insurance Code Section
1861.02(a)(2). This factor means the estimated annual mileage for the
insured vehicle during the 12 month period following the inception of the
policy. Insurers may not retroactively adjust premiums based on actual miles
driven unless notice is provided to the policy holder prior to the effective
date of the policy. Estimated annual mileage shall be determined only as
follows:
(A) For new business:
(i) At the inception of a policy, an insurer shall require an applicant to
provide the miles he or she expects to drive the insured vehicle during the
12 month period following policy inception, and reasonable information
necessary to support the estimate. "Reasonable information" consists of the
location of the applicant's workplace if the vehicle is used for commute
purposes, the number of days per week the vehicle is used for commuting, an
estimate of the number of miles driven for pleasure or other purposes, the
approximate total number of miles driven the previous year, and the reason
for any differences in the estimate for the upcoming year and the miles
driven the previous year. Except as otherwise set forth in this section, an
insurer shall use the applicant's estimated annual mileage;
(ii) To substantiate the estimated annual mileage, an insurer may require
all applicants to provide, at policy inception, the current odometer reading
of the vehicle to be insured or the insurer may obtain the odometer reading
from the California Department of Motor Vehicles smog certification program;
(iii) If an insurer markets using an independent or captive agency system,
and an applicant meets with an agent in connection with the insurance
application, the insurer may require the agent to verify the odometer
reading of the vehicle to be insured under the policy, and the applicant
shall allow the agent to do so;
(iv) If an applicant does not provide the information set forth in (i) and
(ii) above, and the insurer has no other means reasonably to estimate the
miles to be driven during the 12 month period following inception of the
policy, and the insurer has clearly indicated the consequences of not
providing that information, the insurer may issue the policy using a default
annual mileage figure, which has been filed with and approved by the
Commissioner. Upon receipt of the information set forth in (i) and (ii)
above, the policy shall be rated using that information. The insurer may
choose to re-rate all policies as of the date it receives the information,
or as of policy inception. However, an insurer shall apply the same method
for every policy.
(v) All mileage rating rules that direct the selection of a mileage rating
relativity shall be filed with and approved by the Commissioner. This
includes use of multiple mileage rating bands and use of default and/or
average mileage rating relativities.
(vi) In no event shall an insurer rate a policy unilaterally changing the
mileage estimate provided without notifying the applicant of that change and
providing the applicant a reasonable opportunity, no less than fifteen days
from the date of mailing of that notice, to challenge the insurer's
determination.
(vii) An insurer may request but shall not require an applicant to provide
prior documentation, such as prior vehicle maintenance records or prior smog
certificates, in order to confirm mileage driven because, for a variety of
reasons, applicants may not have access to this documentation.
(viii) In no event shall an insurer require an applicant to provide
information from a prior insurer to confirm mileage estimated or driven.
(B) For renewal business:
(i) Prior to policy renewal, an insurer shall require a policyholder to
provide the miles he or she expects to drive the insured vehicle during the
12 month period following policy inception, and reasonable information
necessary to support the estimate. "Reasonable information" consists of the
location of the applicant's workplace if the vehicle is used for commute
purposes, the number of days per week the vehicle is used for commuting, an
estimate of the number of miles driven for pleasure or other purposes, the
approximate total number of miles driven the previous year, and the reason
for any differences in the estimate for the upcoming year and the miles
driven the previous year. Except as otherwise set forth in this section, an
insurer shall use the policyholder's estimated annual mileage;
(ii) To substantiate the estimated annual mileage, an insurer may require
all policyholders to provide, at policy renewal, the current odometer
reading of the vehicle to be insured or the insurer may obtain the odometer
reading from the California Department of Motor Vehicles smog certification
program;
(iii) If an insurer markets using an independent or captive agency system,
and a policyholder meets with an agent in connection with policy renewal,
the insurer may require the agent to verify the odometer reading of the
vehicle insured under the policy, and the policyholder shall allow the agent
to do so;
(iv) If a policyholder does not provide the information set forth in (i) and
(ii) above and the insurer has no other means reasonably to estimate the
miles to be driven during the 12 month period following renewal of the
policy, and the insurer has clearly indicated the consequences of not
providing that information, the insurer may renew the policy using a default
annual mileage figure, which has been filed with and approved by the
Commissioner. Upon receipt of the information set forth in (i) and (ii)
above, the policy shall be rated using that information. The insurer may
choose to re-rate all policies as of the date it receives the information,
or as of policy inception. However, an insurer shall apply the same method
for every policy.
(v) All mileage rating rules that direct the selection of a mileage rating
relativity shall be filed with and approved by the Commissioner. This
includes use of multiple mileage rating bands and use of default and/or
average mileage rating relativities.
(vi) In no event shall an insurer rate a policy unilaterally changing the
mileage estimate provided without notifying the policyholder of that change
and providing the policyholder a reasonable opportunity, no less than
fifteen days from the date of mailing of that notice, to challenge the
insurer's determination.
(vii) An insurer may request but shall not require a policyholder to provide
prior documentation, such as prior vehicle maintenance records or prior smog
certificates, in order to confirm mileage driven because, for a variety of
reasons, policyholders may not have access to this documentation.
(viii) In no event shall an insurer require a policyholder to provide
information from a prior insurer to confirm mileage estimated or driven.

Authority cited: Section 1861.02, Insurance Code; and CalFarm Insurance
Company v. Deukmejian (1989) 48 Cal.3d 805. Reference: Sections 1861.02,
1861.05, 11628 and 11628.3, Insurance Code.

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