Motorists Could Avoid Additional Debt In California

Consumers looking to cut their monthly bills may find some new initiatives by California insurers could save them money and help them cut debt.

As of February, state residents with registered motor vehicles who receive their auto insurance coverage from State Farm Mutual or the Automobile Club of Southern California can enroll in pay-as-you-drive coverage programs.

These new policies are designed to help those who drive infrequently, by allowing consumers to purchase insurance based on the amount of miles they travel rather than on a monthly basis, The Los Angeles Times Reports. This could save State Farm customers 45 percent of the cost on six-month premiums and in some cases save them hundreds of dollars, the company says.

"The voluntary pay-as-you-drive initiative is an innovative program that will allow insurers to offer plans based on more accurate mileage, so that people who choose to drive less will pay less for auto insurance," California Insurance Commissioner Steve Poizner told the news source.

The Auto Club, the state's second-largest car insurance company, says drivers could save between 1 percent and 10.5 percent on premiums based on their driving habits.