Pay as you go insurance may be a cheaper way to insure your car if you drive very few miles, or if you're a new or young driver battling sky-high premiums.
We all love a subscription box.
Coffee, beauty products, or stationary, it’s a little treat every month that doesn’t cost the earth.
You couldn’t liken car insurance to a present in the post, but, subscription pay as you go car insurance may be an unexpected gift to the bank account if you don’t drive many miles.
If you’re an infrequent driver, but paying the same as a mile-guzzling petrol head, you may be interested in car insurance that adjusts its cost based on your driving routine.
Pay as you go, or pay as you drive cover, charges by the hour or per mile, on top of a monthly subscription charge.
Most cars are covered under these policies, with a few conditions:
Here’s how it works:
If you’ve capped the number of hours you want to be insured for, but you’re going to go over, it’s like topping up mobile phone credit - use the app and top up the time.
A pay as you go car insurance policy is usually a rolling contract. You could cancel the policy at any time without incurring penalties but read your terms and conditions carefully before signing up.
And, best news yet, if you subscribe to a PAYG policy for 13 consecutive months without making a claim, you'll build up no claims discount, just the same as a traditional car insurance policy.
Is this black box insurance by any other name?
There are different forms of pay as you go car insurance that’ll ask you to fit some tech to the car, which can be used alongside an app.
The notable difference is that in addition to the monthly subscription fee, these policies will charge per number of miles driven, rather than hours.
And it’s an automatic service - you don’t need to tell an app how long you’ll be out, or how far you’ll travel, but you can use an app to calculate exactly how much your journey will cost, putting you in complete control.
If you’re not sure which policy would best suit you, think of it this way: if you pay for an hour on the road and only drive 15 miles, arguably, you’re paying for unused time.
Like black box car insurance, pay as you go car insurance that charges you per mile monitors how you drive and recalculates the price per mile based on how safely you drive.
Unlike black box insurance, you feel the benefit of safer driving straight away - you’ll be rewarded with a cheaper premium the very next month.
It’s also possible to insure a car for a very short period of time, again using an app to register your details.
For instance, it’s handy when:
Open the app, add your details and the car's covered for a short window or time.
You don’t need to be the owner of the car, and your ‘flash in the pan’ cover won’t affect the existing insurance already on the car.
If you compare car insurance with GoCompare, the lowest annual mileage you can tell us is up to 1,000 miles.
Yes, that’s very low but it’s entirely realistic - if you only drive for 12 minutes a day, Monday to Friday, that’s four hours a month, and if you cover 12.5 miles per week, that’s just 650 miles a year.
If you make very short daily journeys or use your car only for a couple of hours once a month, your driving lifestyle may save you some money.
Infrequent drivers may get a much cheaper quote by using pay as you go, but it’s impossible to tell unless you compare all the options.
Motorists between the ages of 17 and 24 are a demographic often penalised by insurers because statistically, it’s this age group which is most likely to have an accident.
Again, subscription car insurance may offer an escape from wild premiums charged to young drivers.
Pay as you go car insurance is a pretty head-turning concept, but as with all new releases, there are a few teething problems you’ll need to be aware of:
It’s also worth mention that a pay as you go policy probably won’t offer any additional savings for drivers that use their car every day and travel a long way, sorry folks.
Obviously, there are other ways you can get a cheaper quote - read about it in our top tips for cheaper car insurance.