NEW JERSEY DEPARTMENT OF TRANSPORTATION

IMPLEMETING PAY-AS-YOU-DRIVE INSURANCE, STATEWIDE

RACM Analysis

Control Measure:

Implementing pay-as-you-drive (PAYD) insurance statewide.

Description:

Insurance premiums are based directly on how much driving is done during the policy term. The 

more the consumer drives, the more they pay. Conversely, if the consumer drives less, they save. 

A per-unit premium would be used, i.e., per-mile, per-minute, etc. Existing rating factors could 

be included in the per-unit premium. For example, higher risk drivers would pay a higher perunit premium.

Documentation:

 American Petroleum Institute, State Motor Fuel Excise Rates as of July 1, 2005. 

www.api.org

 Department of Energy, Energy Information Administration (EIA), Retail Gasoline Prices:

http://www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/mogas_home_page.html

 Center for Clean Air Policy Guidebook: www.ccap.org/guidebook

 Victoria Policy Institute. Pay-As-You-Drive Vehicle Insurance, Converting Vehicle 

Insurance Premiums Into Use-Based Charges: www.vtpi.org/tdm/tdm79.htm

Methodology:

The total annual and daily affected VMT were calculated. Emission factors were then applied to 

obtain the emission benefits of instituting a PAYD insurance program statewide.

Inputs/Assumptions:

 Insurance is optional and is expected to have a 5% participation rate in 2009

 Imposing a mileage fee of $0.06/mile is assumed to reduce VMT by 10%

 VMT and emission factors obtained using MOBILE6.2

Results:

Total Affected VMT:

Daily: 639,517 miles/day

Annual: 223,696,132 miles/year

Statewide Benefits (Emission Reductions):

Pollutant

Type

Analysis Year 2009

tons/day tons/year

VOC 0.38 NA

NOx 0.36 146.00

PM2.5 NA 17.50

SO2 NA 0.56

*Statewide emission benefits include counties not included below
NEW JERSEY DEPARTMENT OF TRANSPORTATION

IMPLEMETING PAY-AS-YOU-DRIVE INSURANCE, STATEWIDE

RACM Analysis

Ozone Analysis – Daily Benefits (tpd) in New Jersey:

Benefits 

(Reductions)

Ozone Non-Attainment Area

NY-NJ-CT PA-NJ-MD-DE

VMT 455,611 183,905

VOC (Tons/Day) 0.26 0.12

NOx (Tons/Day) 0.26 0.10

PM2.5 Analysis – Annual Benefits (tpy) in New Jersey:

Benefits 

(Reductions)

PM2.5 Non-Attainment Area

NY-NJ-CT PA-NJ-DE

VMT 155,663,911 39,687,396

NOx (Tons/Year) 101.20 26.41

PM2.5 (Tons/Year) 14.20 0.54

SO2 (Tons/Year) 0.22 0.32

Cost Benefit Results:

Inputs/Assumptions:

 Retail gasoline price = $2.40/gallon.

 An average fuel economy of 25 miles per gallon was assumed.

 A total of 250,000 vehicles will participate in the program in 2009.

 Each participating vehicle will pay $30.00 per year for audits.

 Insurance premium savings are based on the $.06/mile fee and the resulting 10% decrease 

in VMT.

 The costs were analyzed from a consumer benefit standpoint. The costs resulting from 

performing the yearly audits (operations, administrative, etc.) and any lost premiums to 

insurance companies were not accounted for in these calculations.

 Three mileage categories were established and the participating vehicles were divided 

among the categories in each nonattainment area as follows:

Mileage Category

Percent of Total 

Participants

Ozone PM2.5

< 6,000 65% 76%

< 12,500 25% 20%

< 18,000 10% 4%
NEW JERSEY DEPARTMENT OF TRANSPORTATION

IMPLEMETING PAY-AS-YOU-DRIVE INSURANCE, STATEWIDE

RACM Analysis

Nonattainment Area

Ozone ($/tpd)

VOC NOx

NY-NJ-CT $ (210,645) $ (212,528)

PA-NJ-MD-DE $ (181,581) $ (214,825)

Statewide $ (201,376) $ (213,184)

Nonattainment Area

PM2.5 ($/tpy)

NOx PM2.5 SO2

NY-NJ-CT $ (180,491) $ (1,286,808) $ (85,120,322)

PA-NJ-DE $ (176,386) $ (8,747,854) $ (14,341,833)

Statewide $ (179,641) $ (1,556,597) $ (42,499,091)

* Parentheses denote a cost savings.