Pay-per-mile car insurance could save you HUNDREDS and mean you’ll never need an annual premium again
PAY-as-you-go insurance policies could be the answer to fighting costly policies.
Car insurance premiums can often put a large dent in your wallet, and leave a number of motorists struggling to afford to stay on the road.
The UK's very first pay-per-mile insurance company has just launched, meaning policy holders will only pay for cover based on how much they drive.
By Miles uses a black box to track your journey, and charges you according to the actual miles you have travelled.
Pay-per-mile cover could help keep low-mileage drivers mobile and stop them paying huge premiums for a car they're not using.
Those who just use their cars at the weekend or who drive a family member's motor infrequently can take advantage of short term cover to slash bills.
How pay-per-mile policies work
THE pay as you go model means you're only charged for when you're using the car.
Your vehicle will be covered with a basic policy while it's parked up and you'll be charged for this via your upfront annual fee.
When you take the car on a journey, the black box fitted to the on-board diagnostic port on your car will log the journey distance with a fee charged per mile.
Each journey will be calculated and you'll get a monthly statement telling you how much you need to pay for insurance - if you're a low mileage driver it's likely to be much less than a normal policy.
Cover with By Miles will be fully comprehensive and you'll still be able to collect a no claims bonus - and every policy comes with No Claims Discount protection as standard.
Just like mobile phones, you'll be able to track your cover via a smartphone app to see journeys and unlock other features.
By Miles, which is backed with funding from Jaguar Land Rover, said its system was the first to charge in “real time” for the distance travelled.
And then each trip is logged with drivers charged via a monthly statement at the end of each month.
According to , a minimum flat-rate of £150 per year is charged, with distance-based rates starting at 3p per mile.
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Some companies - like Cuvva - already offer hourly insurance rates, but these aren't always the cheapest option if you are using your car regularly or for long periods.
Co-founder and CEO James Blackham said the policies are likely to benefit drivers who do less than 7,500 miles a year.
When By Miles was first announced last July, Blackham told Auto Express: "Right now insurance is ‘all you can drive’ but in this modern age that doesn’t necessarily make sense, especially if you’re driving less than the average number of miles in each year, which is about 7,500."
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The telematics kit will also be able to check your car's health and track your car if it's stolen.
Ben Howarth, senior policy adviser at the Association of British Insurers said: "Developments such as these show how the insurance industry is matching innovations in car technology with new products that allow increased flexibility for drivers."
Earlier this week we reported how car insurance prices have dropped by as much as £403 in the last year, but a number of drivers are still paying more than they should be.