Pay–as-you-go car insurance

If you drive just a few miles per year and are considered a low-mileage driver, yet still find yourself paying lots for motor cover, then this may be the perfect kind of policy for you.

Fact is that millions of folks buy their mobile phone service on a pay-as-you-go type contract. Now, car insurance is being offered in very much the same way; you pay only for the miles you actually drive. There are two start-up firms now in the UK that may have just the answer.

The idea is quite simple. Users will pay a flat monthly fee- about £10 to £30- which provides the basic fire and theft part of the insurance. There is then a charge on top of that to drive the vehicle. In essence, the driver pays for each journey made, and it’s all managed by using a mobile app on a rolling monthly contract.

Starting  at the end of this month, a company named Cuvva will begin offering its very own pay-as-you-go car insurance to a group of specially invited customers ahead of an eventual nationwide rollout.

Cuvva says that these policies are aimed at and will help city dwellers who typically drive their vehicle 3000 to 5000 miles per year who use their car infrequently at evenings or weekends for leisure activities.

The company already offers by-the-hour insurance to folks that for example want to drive cars that are owned by family or friends, where they just login to the company’s smartphone app before each journey to buy insurance for that journey.

Cuvva claims that some low-mileage drivers may be able to save as much as £500 a year when compared to a traditional annual policy.

It is expected than it in the next few months, Cuvva will be joined by another tech start-up (and of course rival) Just Miles. While the proposition is without a doubt similar, Just Miles will require that its customers install a free on-board telematics box. The company would use this box to keep track of miles driven. Instead of charging per journey, or by the hour, Just Miles customers would pay only for miles actually driven.

As of now, Cuvva offers its cover to drivers that are 21 and over, whereas Just Miles expects that they will have a minimum age of 25 on start-up.

Just Miles says that users simply need to input their destination into a smart-phone app and they will be given cost, helping them to decide if possibly public transport would be the better option.

Charges by both companies are expected to be capped at 150 miles per day, meaning that those heading off for holiday would not be racking up massive charges.

At the end of each month, a user will get a mobile phone type bill that shows the exact trips that were made. A customer will be able to earn a no-claims discount the same as they would with a traditional policy.

No one can argue that these policies won’t have the greatest appeal to very-low-mileage drivers. All pay-as-you-drive policies will still use rating factors such as age, postcode, your driving history, claims and convictions, and without a doubt these factors are very likely to influence the premium a customer pays far more than how many miles they actually drive their car.

So, you’re wondering if will these policies take off? It’s a little difficult to judge whether they will offer real savings without seeing some actual prices. If they do indeed offer some genuine savings to low-mileage drivers, they are bound to find many takers.

 

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