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How often do you drive? If you get behind the wheel every single day then an annual insurance policy is probably right for you.
If you only drive occasionally – maybe you commute into your workplace via public transport during the week or are retired and no longer need a car on a daily basis – a cost-effective cover option could be pay-as-you-go car insurance (PAYG). This is a flexible alternative to traditional annual policies.
PAYG insurance is not appropriate for high-mileage drivers as it can easily become quite expensive.
There are a few types of pay as you go car insurance, and the best option for you will depend on individual needs.
With this type of PAYG insurance, the less you drive, the less you pay. It charges you depending on how long you actually spend driving.
It’s a good option for low-mileage drivers or anyone who faces high premiums e.g. younger or convicted drivers. It encourages better planning to keep your costs down.
This usage-based insurance is aimed at new drivers. It uses telematics or a black box device to track and measure how safely you drive.
It will use these details including how hard you brake and how fast you accelerate to calculate your premium. The safer you drive, the lower it will be. This would appeal to young or new drivers who face high premiums.
Need cover for a few hours, days or weeks? Temporary car insurance gives you comprehensive coverage for a fixed amount of time, meaning it’s perfect when you need to borrow a car, take one for a test drive or collect a new vehicle.
You can also cover somebody else to drive your car. It’s often more economical than a 12-month policy for short-term needs.
Pay-as-you-go car insurance companies charge policyholders based on how much or how they drive. Pay-per-mile tends to charge a base rate per month and then a set amount per mile driven.
Pay-as-you-drive considers your driving habits to see how safe a driver you are. If the telematics system deems you to be safe, your premium will be lower. If it sees your driving as a risk, your premium will increase.
Temporary car insurance covers you for a set amount of time. At Tempcover, we offer flexible coverage from one hour to 28 days. Once you have your policy, you can drive the vehicle with the peace of mind that comprehensive cover provides.
This often depends on your circumstances. If you’re a student or retired and only use a car (your own or borrowed) on an occasional basis, pay-as-you-go car insurance can sometimes work out a cheaper option.
Pay-per-mile is an appealing option for younger drivers who are just starting out (as they often face expensive premiums), remote workers and weekend car users. It can also be used to cover second cars that are perhaps not driven as much.
Pay-as-you-drive can also cover similar road users. If you have low annual mileage or don’t drive regularly, your safe driving habits will be rewarded with a lower premium.
Temporary car insurance can be used when you’re moving home, running errands or needing to borrow a car while yours is in the garage for an MOT or repairs.
Pay-as-you-go car insurance policies will fall under three types of insurance cover:
While most PAYG policies are likely to be fully comprehensive, check the details when arranging a quote. Tempcover’s temporary car insurance policies are fully comprehensive and will not affect any existing no claims discounts.
Prices of PAYG car insurance can vary depending on factors including the driver’s age, experience (including convictions or penalties), mileage and the type of car being covered. Your address and occupation may also be considered.
Pay-as-you drive insurance tends to have an upfront payment or monthly fee and then will charge by mileage. Usage-based insurance – or black box insurance as it’s sometimes known – also often lowers premiums in exchange for your driving data. You could end up paying more, however, if you consistently tend to break the speed limit or have a habit of braking suddenly.
With pay-as-you-go insurance, you have more control over the price of your premium. If you are an occasional driver or only need insurance when you’re borrowing somebody else’s car, it can be worth considering as it may end up cheaper than paying out on a 12-month policy.
With pay-per-mile, you can evaluate how much you want to pay and tailor your driving accordingly, while pay-as-you-drive will reward you with lower-priced premiums if you drive safely.
With both of these types of insurance, you can cancel anytime – perfect if you unexpectedly need to to stop driving. You may have to give notice but will avoid the cancellation fee found with most traditional car insurance policies.
With temporary car insurance, you know exactly how long you’re covered for – potentially to the hour of your choosing. All of these PAYG insurance policies are more tailored to occasional drivers than frequent ones.
On the flip side, PAYG can end up quite expensive for frequent drivers. Anyone who regularly commutes or takes on long trips may face PAYG bills that are higher than traditional car insurance. The complexity of paying a base rate, charges per mile and telematics fees may also prove confusing.
Some drivers may also have issues with the dependency on telematics and be wary of privacy concerns and errors in tracking data that could have a negative impact on their insurance premiums.
Pay-as-you-go car insurance is becoming an increasingly popular form of cover for anyone who only occasionally drives. With options ranging from paying per mile to basing a premium on safe driving habits, there’s something for every kind of driver. Our fully comprehensive and flexible temporary car insurance lets you decide how long you need cover for.
Marc Pell
Managing Director
Young drivers often face expensive premiums after passing their test – and this could be on top of buying their first car. To save money, these drivers could look into pay-as-you-go insurance.
These options include pay-per-mile insurance (the less you drive, the less you pay), pay-as-you-drive insurance (the safer you drive, the lower your premium) and temporary car insurance (you’re in control of how long you have comprehensive cover for).
Yes, you can. Do your research to decide which PAYG car insurance policy is right for you and then get a quote. You’ll be on the road in your parents’ car in next to no time.
Various factors determine the price of pay-as-you-go car insurance. Do your research and shop around, ensuring the PAYG insurance covers everything you need it for. Temporary car insurance has a set fee for the time you use it, pay-per-mile depends on how far you drive and the usage-based pay-as-you-drive (PAYD) policy will determine your premium based on how safely you drive.
This will depend on how far you are planning to drive. When you’re charged per mile, you will have to pay less when you drive less. If you are planning on various long journeys, you might be better off with an annual policy or temporary insurance if these journeys are planned over a number of weeks.
It’s unlikely that you will have to pay a deposit for pay-as-you-go (PAYG) insurance but you should always check the details, including the small print, when taking out any insurance policy. This should provide details of any deposit.
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