Rising premiums can seem like a constant scourge when you are attempting to save money on car insurance. Nonetheless, there remain various ways of reining in the cost – and, if you use your car fairly infrequently, you could particularly benefit from switching to pay as you go car insurance.
This type of car insurance is largely self-explanatory; it lets you quickly arrange insurance as and when you need it, rather than shell out for a year-long policy. However, exactly how does such insurance work – and could it work particularly effectively for you?
How much money could be saved?
While it is no secret that car insurance is expensive, breaking down the costs could help you see this in greater – and rather eye-opening – clarity. YourMoney.com says that, in the UK, 821,000 of car owners are estimated to weekly drive for only an hour or less.
As the yearly cost of an annual car insurance policy is £847, these drivers are paying £16 for each hour they drive. It’s understandable, then, why these motorists could make big savings. Cuvva, the insurer responsible for the UK’s first app-based pay as you go car insurance, claims that the yearly savings could reach £300 per motorist.
Freddy Macnamara, who founded Cuvva, remarks: “A lot of drivers only need their car once in a blue moon, yet they often end up paying the same price for their insurance policy as someone who is constantly on the road”, adding that this is “clearly an unfair situation”.
Insurance that could give you the biggest savings – by miles
If your car journeys are indeed few and far between, while high inflation and disappointing wage growth have been tempting you to tighten your household belt, you could understandably be considering pay as you go car insurance.
Each pay as you go insurer will charge for insurance by the mile – and, when you take out a policy, specify how many miles you are permitted to drive each year. Should your mileage fall below this amount, these surplus miles can just be credited and rolled over for the following year. Meanwhile, you can “top up” your miles allowance if you anticipate driving more miles than usual.
Other insurance services that could make you app-ier
You might particularly like the idea of an app-based insurance policy, with which you can load up an app on your phone whenever you want to pay for your journeys. With Cuvva, you would pay for a monthly subscription to the service, for which you would then need to pay an additional charge to get the insurance that you require to drive, The Guardian explains.
Another app-based service from By Miles works similarly, though one exception is that the company requires customers to install a free telematics box which will monitor how the vehicle moves. If you are feeling indecisive due to the range of insurance options available, an insurance broker like the UK’s Call Wiser can speedily compare an array of quotes for you.