Pay-as-you-go cell phones have been around for years. They save you money by only making you pay for the minutes you use. Now states are beginning to consider pay-as-you-drive car insurance where you only pay for the miles you drive. But a provision of the insurance plan is making many privacy advocates nervous.  

California Assemblyman Jared Huffman (D-San Rafael) is the author of a bill that would authorize the option for the state.  If the high gas prices weren't enough to keep drivers off the road more often, the pay-as-you-go insurance model would provide an additional incentive to walk, car pool, ride a bike, or take public transit - all those things many commuters are just beginning to see as alternatives to pain at the pump.

A few insurers in 34 states, but not yet California, offer the pay-as-you-drive option. Insurance companies and environmentalists are lobbying the California state legislature to have the option in California. They argue that given the high levels of pollution and traffic congestion in California, an additional incentive to keep drivers off the road more often will put more money in the hands of drivers, while insurance companies can ease their accident worries.

One provider of pay-as-you-go insurance, GMAC Insurance Group, says its customers have reduced the premiums they pay by 13-54 percent, claiming that California drivers could expect to get similar savings if the program is approved there.

Opponents of the new idea worry that GPS tracking devices installed in the pay-as-you-go insured vehicles to accurately monitor mileage float to far into the Big Brother arena. They believe this type of behavioral monitoring violates their personal privacy, and fear what companies could potentially do with the information.

"It's going to give insurance carriers your exact location at all times and could wind up being subpoenaed in divorce proceedings and other lawsuits," Paul Stephens of the Privacy Rights Clearinghouse told the LA Times.

One Daily Kos blogger fervently agrees.

"This is going too far, in my opinion. I'll be dammed if I want to become some blip on a computer screen monitored by some idiot with a sandwich in one hand and a playboy magazine in the other, paid to keep tabs on my movements from the time I pull out of my driveway to the time I make it back home."

Others worry the monitoring will lead to higher insurance rates, as insurers close the gap between reported miles driven and actual miles driven.  Of course, drivers are supposed to report the amount of miles they drive each week accurately.  But until now, who was there to stop a little number fudging?

Not everyone shares the same level of worry over the pay-as-you-go program.  According to the Brookings Institution, a Washington policy think tank, pay-as-you-drive insurance programs could create $52 billion in annual benefits from fewer accidents, reduced traffic and pollution, and decreased reliance on foreign oil.

Their claims are supported by data from the U.S. Department of Transportation, which recently reported that Americans drove 1.4 billion fewer miles in April than they did a year earlier.  Apparently, a little incentive goes a long way.

What's clear is that pay-as-you-go insurance can save folks money while inadvertently helping to alleviate congestion and air pollution. But before we all submit our lives - secret and no so secret - to the eyes in the sky, perhaps other alternatives should be proposed. 

For instance, why can't a device be implanted in the car to track actual mileage as it renders on an odometer?  An electronic signal could relay the odometer information to a satellite feed, which could then be relayed to insurance provides.  This eliminates the need to track every movement of the car being insured with a GPS device. And at the end of the day, isn't it just about the miles traveled, not the location?