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Pay As You Drive car insurance

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Last updated on

06 September 2012

Here's a car insurance product that might be an awful lot cheaper for people who don't use their cars much or off-peak drivers.

Coverbox

Coverbox offers PAYD policies from insurers including the Co-operative, Allianz and Sabre.

You have to provide the insurer with details such as your age, where your car is kept, how many miles you normally drive and at what time most of your driving takes place. You're then given a monthly premium price. This is then reviewed by looking at data from a white telematics box fitted in your car, and your premium price changes depending on how strictly you’ve stuck to the original details.

You can view your mileage online via your own personalised dashboard. If you're planning a longer road trip, you can temporarily upgrade your policy for an additional charge.

Insure the Box

Launched in 2010, drivers save an average of £500 per policy with Insure the Box, rising to £821 for first-time motorists. Drivers buy a bulk of insurance miles, starting with 6,000, and a small clear box is installed for free behind the dashboard.

Policy holders can earn up to 100 bonus miles per month if they are driving according to the safety rules. If you go over the 6,000 miles, your bonus miles kick in and if you’ve used them all up you need to buy top-up blocks – at a cheaper price than the original premium.

At the moment 60,000 people are signed up to Insure the Box, making it one of the biggest types of black box insurer.  Although it’s primarily designed for young drivers, drivers of all ages can apply.

Pros of Pay As You Drive car insurance

  • If you don't drive a lot, your premiums could be far less than a standard car insurance policy.
  • It might make you think about the car journeys you make and whether you really need to make them.

Cons of Pay As You Drive car insurance

  • If your circumstances change, for example you need to travel further to a new job, you may end up paying more than you would for a standard policy.
  • If you drive mostly at night, even only infrequently, a PAYD policy may be more expensive than a standard one.
  • Your driving's being tracked – you may see that as a pro, but a lot of people see it as a con.

Shop around

Make sure you shop around before you opt for a PAYD policy, just in case it would be cheaper to go for a standard deal instead.

Compare car insurance policies

Additional research by Rebecca Rutt

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