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Pay-as-you-go car insurance

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What is pay-as-you-go car insurance?

Pay-as-you-go car insurance charges you based on the number of miles you drive. This is why it's also commonly referred to as 'pay per mile' car insurance.

You pay a flat base rate for your cover, which is usually cheaper than what you'd pay for standard car insurance. You then pay extra for each mile you drive. So it can work out cheaper for occasional drivers.

Pay-per-mile car insurance is still an annual policy and shouldn't be confused with hourly car insurance or other short-term policies for infrequent drivers.

We currently compare quotes from 4 pay-as-you-go insurance providers, which are labelled as a 'pay per mile policy'. When you get a quote, we’ll show these, plus quotes from up to 140 of our normal panel of providers.

How does pay-as-you-go car insurance work?

If you get pay-as-you-go car insurance, you're charged a base rate for your cover. You can pay for your policy either annually or monthly.

You're then given a monitoring device that's either fitted to your car or an app you download to your phone. It tracks the number of miles you drive each month, and you're billed at a pre-agreed rate for each one.

It’s not the same as a Telematics policy, which monitors how you drive and your mileage. Pay-as-you-go or pay-per-mile car insurance policies only look at the distance you travel.

Is pay per mile car insurance cheaper than standard car insurance?

It can be. If you only drive occasionally, pay as you go or pay per mile insurance could be a good way to keep your costs down.

But if you drive regularly, standard car insurance might be more cost-effective.

There are other ways to get cheaper car insurance too, so it’s worth considering these before buying a pay as you go policy.

Compare cheap pay as you go car insurance quotes

Who is pay per mile insurance good for?

Pay per mile insurance isn't for everyone, but if you have a low mileage, it may be useful for:

  • Infrequent drivers who only drive occasionally
  • Older drivers who don't drive often but aren't ready to stop driving altogether
  • Remote workers who no longer commute, especially if they drive infrequently outside of work
  • Young drivers who generally have a low mileage

Will I need to have a black box installed?

Your insurer needs to track your monthly mileage if you’re on a pay as you go insurance policy.

To do this, they either:

  • Install a black box in your car
  • Send you a black box by post that you install yourself
  • Send you a link to an app that you download to your mobile

You should be told exactly how your tracking device works, what data it collects and who it’s shared with. Plus, it should only monitor your mileage.

What are the pros and cons of pay-as-you-go insurance?

As with all insurance policies, there are pros and cons to pay as you go car insurance:


  • You only pay for the miles your drive
  • You have a car available for use in emergencies
  • It can be cheaper for younger drivers if they keep their mileage low


  • High-mileage drivers might pay more
  • It could cost more if your circumstances change, like if you get a new job with a longer commute
  • It's harder to manage your finances with varying monthly costs depending on how much you drive

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*Based on data provided by Consumer Intelligence Ltd, www.consumerintelligence.com (February '23). 51% of car insurance customers could save £407.05
**Single annual policy. Shell Go+ account required. Only one £10 fuel reward can be used per transaction and each can only be used on fuel purchases of £10 or over. HelloFresh 18+ subscription service. Geographical exclusions apply. T&Cs apply

What levels of pay-as-you-go insurance are there?

Some providers only offer comprehensive cover on their pay-as-you-go insurance policies. 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 covers damage caused only to other people’s property or vehicles.
  • Third-party, fire and theft covers against damage to your own car caused by fire or theft. It also covers damage to other people’s properties or vehicles.
  • Comprehensive car insurance offers the most cover and can sometimes be the cheapest of the 3 types.

What extras can I get with my pay-as-you-go policy?

Each insurance provider offers different types of optional extras, or add-ons, but most insurers generally offer:

What our car insurance expert says

By only paying for the miles you drive, your insurer gets a more accurate idea of your driving. It can be a great way to save money if you're just starting out or if you're an older driver who doesn't use the car much.

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.

Louise Thomas - Car insurance, personal Finance, mortgage and life insurance expert signature

Louise Thomas

Car insurance expert

Need more help?

Can I switch from pay-as-you-go to a standard policy if my usage changes?

Yes. Most pay per mile policies are rolling subscriptions, so you can usually cancel them fairly easily if your circumstances change. Just be aware that you may have to give notice to do so.

Once you’ve cancelled, you’ll then be able to take out a traditional car insurance policy - which might end up cheaper if you’re driving a lot of miles.

Can I get pay-as-you-go food delivery insurance?

This depends on the provider, so it’s worth checking with your insurer to see how they can help.

You’ll need more than just car insurance to work as a food delivery driver too. You’ll usually need business car insurance, alongside some courier-specific policy extras like courier insurance and goods in transit insurance. You might even need public liability insurance. Check with your employer to see exactly what you need in place. 

Will I have a curfew?

It’s unlikely that you have a curfew on a pay-as-you-go car insurance policy. Curfews are typically only imposed on black box policies, which monitor how, when and how far you drive.

Pay as you go policies only track the number of miles you travel. So in most cases, the time of day you drive is irrelevant.

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