Benefits of pay as you go car insurance
Pay-as-you-go insurance falls into two discrete
types: day insurance and policies based on your driving pattern which adjust
The first model is straightforward: day
insurance allows you to cover a vehicle for a short period (typically one to 28
days) rather than a whole year. This could allow you to borrow a friend’s car,
perhaps while yours is in the garage, or cover a car you are interested in
buying so you can take it out for a full test drive.
The more dynamic pay-as-you-go type uses
telematics - electronic monitoring of your car’s use - to help the insurance
company calculate the risk. It may be based on just the mileage you drive; it
could also track location and timings - and therefore monitor speeds. This is
done through a black box - a piece of clever electronics fitted to your car -
or even your mobile phone.
This sounds awfully Big Brother...
Telematics is used to monitor a driver’s use of
the vehicle but for higher risk drivers - young, inexperienced and previously
convicted - it can help to bring down premiums. It allows insurance companies
to gain a clearer picture of your driving patterns and therefore help lead to
lower insurance costs if you minimise your time on the road and drive
With annual insurance, you’re asked to estimate
the mileage you’ll cover in the coming year. Pay-per-mile uses a black box
telematics to determine your exact mileage. There will be a basic rate to cover
your car while it is parked plus an additional amount based on the distance you
Similar to pay-per-mile, pay-per-hour uses a
black box or smartphone app to monitor and transmit vehicle usage data. Again,
you will pay a flat rate plus additional amounts depending on your vehicle’s
Monitoring driving style
A black box connected to you car can also be
used to monitor driving style. So in addition to how much you use your car,
information on how fast you drive, how hard you brake and accelerate, your
location and therefore adherence to speed limits will all be logged. Drivers
are scored on their driving style; the more safely you are perceived to be
driving, the lower the premiums. You will also receive feedback to help
Types of insurance
Like standard annual premium policies,
pay-as-you-go is usually available with comprehensive, third party or third
party, fire and theft. And like any regular policy, you should be able request
the usual add-ons such as legal cover, additional drivers and windscreen cover.
Like any insurance policy, you will have
to provide full and accurate details including your driving history, the car
and of course the period of cover required. Falsifying any information could
leave you uninsured and on the wrong side of the law.
*Photo credit: DVSA Crown Copyright
About the Author
Andrew is a freelance motoring journalist with a background in IT and the vehicle leasing industry. With a lifetime’s passion for all things automotive, he can be found behind the wheel of everything from vans to supercars. In addition to reviewing the latest vehicles and technology, Andrew also runs a couple of classic British motors. He lives at the edge of the Peak District with his son and cat.
Andrew Wright @theMotorWriter