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Pay as you car insurance

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What is pay as you go car insurance?

Pay as you go car insurance, or as it's also known, pay per mile insurance, is car insurance that charges you based on the number of miles you drive.

Insurance providers monitor your driving using smart technology and charge you per mile you drive, on top of a set annual basic rate. It can be a cheaper option for people that only drive from time to time.

How does pay as you go car insurance work?

Your insurance company will charge you a basic rate 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 insurance providers will also monitor how safely you drive. If they think you’re a safe driver then you’ll pay less.

Policies are usually set up as a rolling contract, meaning you can cancel anytime without a charge. But you’ll need to check your terms & conditions as each provider is different.

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

This 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 and then be billed monthly for each mile you drive.

If you only drive occasionally, or don’t clock up many miles each month then this option could work out much cheaper than a standard 12-month car insurance policy.

The average cost of a traditional 12-month comprehensive car insurance policy is £539**. Your price will vary based on factors such as your age, occupation, car and driving history.

**Price based on the Q4 2021 Confused.com car insurance price index.

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

Pay as you go car insurance could make your insurance more affordable for young drivers. Insurers usually class young drivers as high-risk as they’re less experienced and more likely to have an accident.

If you don't drive very often this could be a cheaper option and give you more control over how much you spend on insurance. However, if you fancy getting behind the wheel at every opportunity you may be better off with an ordinary 12 month policy for new drivers.

If you haven’t yet passed your driving test you may need learner driver insurance.

Who does pay as you go insurance help?

Pay as you go insurance can lower the cost of insurance for people that do not drive regularly. This might be older drivers or those that only use their cars at weekends. Sometimes it can also be an option for younger drivers with driving convictions.

What are the different types of pay as you go car insurance?

There are several types of pay as you go car insurance. It can get a little bit confusing, here are the differences and who they might be more suited to:

  • Pay per mile car insurance is offered by providers such as ByMiles. As the name suggests, your insurance is calculated based on how many miles you drive. This might be suitable if you only drive occasionally and want to keep costs down.
  • Temporary car insurance offers flexible short-term comprehensive insurance from 1 – 28 days. With the owner’s permission, temporary policies can be taken out on someone else’s car without affecting their 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 is useful if you’re looking for very short-term cover to drive someone else’s car, or in emergency situations.

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

Some providers only offer comprehensive cover on their pay as you go insurance. But others let you choose the level of cover you want depending on what you need:

  • Third-party offers the minimum amount of cover legally required. It only covers damage caused to other people’s property or vehicles because of your driving.
  • Third-party, fire and theft 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.
  • Comprehensive car insurance offers the most cover and can sometimes work out the cheapest of the three types.

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

Yes, you can add extras to your policy. Each insurance provider will offer different types of optional 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 gets you back on the road fast if your car breaks down.
  • Windscreen cover for 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.

What our car insurance expert says

If you don't drive lots of miles or are a young driver looking to build up some experience, pay as you go can be a good option. If you're worried about keeping track of your mileage, most pay as you go policies will make it easy for you to keep track of your driving and even top-up with extra miles if you need to.   
Alex Kindred signature

Alex Kindred

Car insurance expert

What isn't covered by pay as you go insurance?

What isn’t covered by your pay as you go insurance will largely be set by whether you select comprehensive or third party cover levels.

However, you may not be covered if you use your car in rallies or trials because pay as you go car insurance relies on telematics that monitor your speed, acceleration, braking and cornering. If you do any commercial driving that may not be covered either.

Some insurance providers also may not cover you if your car is worth more than a set limit, or if it’s more than 15 years old.

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