Pay as you go car insurance

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What is pay as you go car insurance?

Pay as you go or pay per mile car insurance offers prices based on the number of miles you drive. Insurers monitor your driving using smart technology and charge you per mile you drive, on top of a set annual basic rate.

Your basic rate is based on things like your driving history, occupation and postcode. This covers your car for theft or damage while it’s parked. After that, it’s pay as you go for each mile you drive which will be billed monthly.

Depending on the policy you choose, some insurers will also monitor how safely you drive. If they think you’re a safe driver then it’ll be reflected in your price.

Policies are usually set up as a rolling contract, meaning you can cancel anytime without a charge. But you’ll need to check your T&Cs as each provider is different.

Is pay as you go car insurance cheaper than a 12-month policy?

This completely depends on your personal circumstances and how much you drive. With pay as you go car insurance, you’ll be charged a fixed rate for the year. You’ll then be charged monthly for each mile you drive. If you’re only an occasional driver, or don’t clock up many miles each month then this option could work out much cheaper for you than a standard 12-month car insurance policy.

The average cost of a traditional 12-month comprehensive car insurance policy is £765*, that’s an average of lots of quotes. Your price will vary based on factors such as your age, occupation and driving history.

The average estimated cost for pay per mile insurance annually is £567**. 

*Price based on the Q3 2020 Confused.com car insurance price index.

**Based on an average of all sales from ByMiles up until the end of May 2020.

Is pay as you go car insurance suitable for young drivers?

Pay as you go car insurance could make premiums more affordable for young drivers. Insurers usually class young drivers as high-risk as they’re less experienced on the roads. If you don't drive very often this could be a more affordable option for you, leaving you in control of how much you spend.

Types of pay as you go car insurance policies

There are several options to choose from if you’re looking for pay as you go car insurance. It can get a little bit confusing, so we’ve explained the differences and who they might be more suited to:

  • Pay per mile car insurance – providers such as ByMiles offer policies based on how many miles you drive. This might be suitable if you’re only an occasional driver, and want to keep costs down.
  • Temporary car insurance – offers flexible short-term comprehensive insurance from 1 – 84 days. With the owner’s permission, temporary policies can be taken out on someone else’s car without affecting the existing insurance policy. This type of policy might be suitable if you need cover in an emergency or need to borrow a friend or relative’s car on a short-term basis.
  • Pay per hour car insurance – useful if you’re looking for very short-term cover to drive someone else’s car, or in emergency situations.

What level of cover can I get on pay as you go?

Some providers only offer comprehensive cover on their policies. But some let you choose the level of cover you want depending on what you need:

  • Comprehensive car insurance offers the most cover and can sometimes work out the cheapest of the three types.
  • Third-party, fire and theft is the middle ground, it covers against damage to your own car caused by fire or theft. It also covers other people’s properties or vehicles against damage caused by your driving.
  • Third-party only offers the minimum amount of cover legally required. It only covers against damage caused to other people’s property or vehicles as a result of your driving.

Can I still add extras to my pay as you go policy?

Yes you can add extras to your policy. Each insurer will offer different types of policy extras, or add-ons, but most insurers generally offer:

  • Courtesy car cover to keep you on the road while yours is being repaired following a claim.
  • Breakdown cover against mechanical or electrical problems that mean you’re unable to drive your car. There are a few options to choose from, based on your needs. 
  • Windscreen cover against damage to your windscreen, side or rear windows. 
  • Legal cover or motor legal protection to help you recover certain uninsured losses for an accident that wasn’t your fault. For example, medical expenses for personal injury or loss of earnings following an accident.
  • Personal accident cover offers additional cover for an injury and/or death caused by an accident. 

Find out more about car insurance policy extras.

Pay per hour car insurance

If you’re looking for car insurance that charges by the hour, then short-term car insurance could be suitable for you. Our partner Veygo offers short-term car insurance starting from as little as £7.55 an hour or £36.81 for 3 days cover***.

***Prices based on the average price paid by 45,498 Veygo customers for the displayed durations (January 2020).

 

Need more help? Take a look at our expert guides
 

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FAQs

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