Car Insurance Based on Miles Driven?

Insurance fees will drop for people who commute by car and drive on weekends, but the fees will increase for business usage.

The Financial Supervisory Service (FSS) announced on January 24 that insurance fees will be set differently in accordance with one’s driving distance.

Currently, automobile insurance fees are decided by a driver’s age, engine displacement, accident record, and driving period without an accident.

Park Byeong-myeong, insurance director of FSS, said, “It turns out that the longer the mileage, the higher the accident rate, so if this insurance system is introduced, the positive effect that a lot more people will use public transportation will be expected.”

The FSS has been taking two different approaches. The first suggestion is that people first pay an insurance fee for expected mileage, then calculate the distance a year later. Another suggestion is a fee based on the distance covered.

However, there are still many possible violations, such as making a fabricated record of the distance covered. It seems difficult to adopt a new system immediately.

Park said it should be decided after analyzing cases in the U.S. and U.K. in which the system has already been tested. Meanwhile, the FSS announced that insurance would be applied from this April differently not only by engine displacement, but also by car model.