Todd Litman of the VTPI is a well-known researcher on, what else, transportation policy. In THIS 34-page PDF, he summarizes long-standing research and recent experience, and describes a fundamental change to charging for vehicle insurance in BC.  Be warned, Mr. Litman is an in-depth kind of guy, and his work is a bad place to look if you simply want to bolster partisan rhetoric.
It’s an interesting way to increase choice, help reduce driving and by doing so, reduce crashes and congestion. Today, most motor vehicle costs are either external or one-time (except for fuel).  Converting some costs, like insurance, to distance-based will encourage some people to reduce their motor-vehicle usage.

Full PDF here.

Personally, I’d like to consider introducing more of society’s motor vehicle costs to operators based on distance travelled —  so-called distance-based pricing (road or mobility pricing).  It’s all part of travel demand management. By turning external costs of motor vehicle operation into distance-variable costs visible to the vehicle operator, those who decide to reduce their distance travelled should be able to see all the financial savings from doing so.


  1. An issue is the administrative effort and cost to measure odometer readings on various makes/models/years. We did a study on this back in 1996 for a regional TDM study and Todd did some of the work. But we hired KPMG to look at this and at that time it was deemed infeasible given the variations of odometers and tampering issues. These days tampering is less likely given the electronics used, but the idea needs to be vetted further from a technological and administrative standpoint.
    As for GPS, it is not as reliable and unless a standard unit is provided to everyone, the challenge of standards and data access is enormous. I’ve done GPS data audits for these types of systems at UBC and through my firm and only on controlled fleets is it feasible at least today. This is an issue where we need industry standards and secure access portals to each device (i.e. an IoT or internet of things device).
    I am all for technology solutions as that is a core of my research and business, but I believe there are more effective, cheaper, and less administratively-challenging options to utilize a distance or usage based approach to pricing. Such a solution needs to understand the institutional arrangements, their governance and powers for pricing/fees/levies, legal landscape (i.e. privacy will be a major barrier), and technological feasibility (including the issue of obsolescence when it takes a few years to just plan a system), just to name a few issue domains.
    But definitely a fun rabbit hole to side into. Where do I sign up? 🙂

  2. Pending resolution of the technical issues Clark describes above, sign me up too!
    We will be in for a big discount as our total km driven averages under 7,000 / year. This is down from ~105,000 km /yr when I worked in the burbs — which would have been 211,000 if I didn’t car pool and trade weeks with a co-worker. To think I put on ~160,000 km / yr when I was a cabbie in another city back in the day.
    Commuting such distances by car is inhuman, and so is the urbanism and direct and external costs this form of commuting imposes on society. Therefore, charging per km is the fairest method of paying for the privilege of driving from an insurance perspective, and will no doubt bring down the number of frivolous trips.

  3. A great idea. I was concerned in the sense that taxes collected into general revenue that pay for roads are intended to be progressive. A flat rate per mile would be regressive, but the scheme actually calls for a higher per mile rate with greater distance driven. This would be a great incentive to cut down the use of cars, which is increasingly unsustainable with so many people moving to cities.

    1. CHOICE — ICBC could get beyond the populist politics involved by having two rate pools (1) distance based (2) the current all you drive system. Over time the all you ca drive people will get it.

  4. It would be simpler to just increase the gas tax to collect enough money to cover the required premiums. I guess you might need to add a border tax as well…

    1. There are many means for the Province and TransLink to collect funds. A vehicle levy is possible and that was tried back over 15 years ago. TransLink held public meetings to consult on the acceptance of levies based on engine size. I was an employee back then and the majority of the people I spoke with grudgingly accepted this approach. We needed ICBC to administer and collect this fairly simple initiative (levy added to basic insurance) but the government of the day (NDP) bowed out from doing so, leading to service and bus purchase cuts.
      And that was only for the Metro Vancouver region, and if this is to be implemented across the province this avenue can still be applied as ICBC is province wide.
      This however is less direct in terms of user pay but as you increase the user pay effectiveness, you increase the complexity and cost. At some point you can maximize through a less sophisticated means and I agree gas tax is such a means. This was an issue with a TransLink-only gas tax given the differential at regional borders (i.e. GVRD/FVRD). I recall an owner of a gas station just inside Langley bordering Abbotsford calling me to voice his displeasure. If the approach is province-wide this is less of an issue and the only border differential is with the US border and influenced by the US-CDN exchange rate.
      Yet another anecdote in the science of the equitable extraction of funds from constituencies.

      1. The price of gas in Blaine is about CDN 40 cents a liter less than Vancouver. If the price in Vancouver went up there would be more people filling up in Blaine

        1. Yes, KPMG looked at the impact of this and there was a correlation between the dollar differential and trips across the border.
          Note that also for odometer readings if one is travelling mostly out of the region then the question of fairness may apply. So a province-wide approach is best. It’s when someone travels mostly outside the province then this becomes an issue. GPS can solve this problem (of where you drive) but it comes with it’s issues.

  5. I think this is a brilliant concept, whose time has come. It is fairly easy to measure these days how much a car has driven, and as such per km road tolls or insurance ought to be studied and implemented speedily. See this impact of lack of road toll on inner city retail at the expense of (subsidized) online shopping with warehouses in the suburbs:
    And of course, parking ought not to be free either. it is a form of modern day squatting, using public property for free.
    Perhaps with the new sherrifs in Victoria we will see some movement here in the next few years in MetroVan, or will this piss off too many MetroVan NDP voters with cars ?

  6. I’d be strongly in favour of this. Right now if you have multiple cars you have to pay multiple insurance bills even if you can’t possibly be driving more than one car at once. Charging by the km would eliminate that double-charge and make it feasible to have an electric car for commuting and shorter trips and a conventional gas or hybrid car for longer ones.

    1. I think multiple vehicle ownership demonstrates the need to have a basic rate floor per vehicle.

  7. Doesn’t ICBC already do something like this, albeit more basically? There are tiers of insurance rates you choose from based on the amount you propose to use your car: commuting or occasional/recreational. Rates for those tiers are set partially on the relative risk exposure (amount you’re on the road) that those tiers represent. The odometer is checked and reported during annual inspection. Use your car more, pay more insurance. Not as fine-tuned as Mr. Litman proposes but the same idea.

    1. The “Drive to school or work” declaration is very suspect as a predictor of risk. Now that I’m retired I drive a LOT more than I did when I commuted to work via transit.
      And there is NO check of the odometer for ICBC renewals.

      1. Suspect, yes, but the same basic principle. You are at least tied to the rates of your declaration, even if these are not annually corroborated as I misunderstood them to be.

  8. This is a no-brainer. Every car since 1998 has an “OBD” port. Cheap & easy to plug in a monitoring device. US insurers now charge based on both distance & driving habits (e.g.: speeding increases premiums). The path is proven. ICBC simply needs to get with the times.

  9. In the 24 plus years I’ve owned my car, it has cost me twice as much in insurance over the price of the car. This is insurance at its most basic. Have never paid for collision coverage and no fire and theft for 20 years. Those would have added close to 15 thousand more to all that cash down the toilet. Feel – totally – ripped – off.
    Meanwhile, every year when I go to renew, these insurance boneheads try to load me up with higher premiums for coverage I don’t want, to get a bigger commission. Hate renewal time – just hate it. I’m an ecological minimalist bike-centered RoadSafe driver subsidizing a bunch of boneheads – the bad drivers, and the insurance workers.
    Give me the option of a punishing deductible – say 10K – if it reduces the premium by half. I’d do it; or a 20K deductible for 75% off. I’d take that one too.
    Collision insurance is for suckers that lease or finance vehicles. If you can’t afford to buy for cash – with more cash left over – you should not buy.

    1. Optional large deductibles are are compatible with both distance based & all U can drive insurance premiums.

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