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Pay As You Go Car Insurance: What You Need to Know

Have you ever felt that you are being asked to pay a lot for your car insurance premiums? You may be the type of motorist who only drives during the weekends. Don’t you think you deserve lower car insurance fees?

The answer is yes—if you avail of the Pay As You Go car insurance. Also known as mileage discount, this is a kind of car insurance wherein the premiums are largely based on the number of miles that you drive. Thus, the less you drive the more savings that you get. This is based on the assumption that motorists who drive occasionally are less likely to be involved in an accident, and thus make a claim.

How It Works

How would the insurance company determine the number of miles that you have driven?

One is by installing a tracking device. This is typically mounted into the onboard diagnostic port of the vehicle. Cars manufactured from 1996 onwards usually have this port.

Car insurance companies also partner with a third party vehicle diagnostic report firm to determine the mileage recorded by an insured car.


There are many advantages of signing up for Pay As You Go insurance.

Obviously, the main advantage of getting this type of car insurance is that you will be paying lower insurance. Insurance premiums in the UK are estimated to be around £2,122 a year. While rates of Pay As You Go insurance differ from one insurer to another, you can expect savings of up to 50 percent if you drive less than 5,000 miles in a year.

You can also get a shorter coverage with this type of insurance. Instead of getting a car insurance cover for 12 months, you can get a shorter coverage for say, 28 days.

Renewal of the policy is also convenient. You’ll get a notice from the insurer informing you that your policy is about to expire. Most insurers even give you the option for automatic policy renewal. Thus your insurance policy will renew automatically even if you don’t notify the insurance company.

This type of insurance also gives you the chance to control your premiums since it is based on mileage. If you can’t afford to pay the premiums, you can plan your journeys accordingly. You may have to drive around off peak hours.

Off peak hours are typically at night and the wee hours of the morning. This can be an ideal arrangement if you drive to and from the office during irregular hours.


Of course, Pay As You Go insurance isn’t always advantageous to drivers. There are also some drawbacks of getting this type of vehicle insurance.

One major drawback is that if you drive more than the mileage set in your policy, you could end up paying more than what you could have spent on a traditional policy.

Think about this—you were assigned to a new work station and this caused you to drive more. You will have to pay more because of this development.

Also, the installation of a tracking device will also cost you a lot. Some drivers also don’t like the idea of having a tracking device installed in their vehicles.

But if you’re not concerned about these disadvantages, and you really want to save on car insurance premiums, it won’t hurt to ask your insurer about Pay As You Go insurance.

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