Pay As You Drive is an innovative short term car insurance plan that is
both beneficial to the insurer and the client. With traditional insurance,
clients pay premiums based on a number of factors such as whether or not
they use the vehicle to commute to their workplace, the total mileage they
cover, the age and type of car, the age of the driver, among others.
With Pay As You Drive, the
concept is totally different. With this plan,
premiums are calculated based on the amount of mileage that was covered
during the month, the type of road that the car was driven on and the time
when the driving took place. If a customer opts to use public
transportation during the month, his monthly premiums will be typically
lower than someone who drove to work. Likewise, those who drive during off
peak traffic hours are bound to pay lower premiums than those who drive
during peak hours.
How Does Pay As You Go Work?
When a customer signs up for PAYD, the insurance company will install a
special blackbox in the customer’s car. This blackbox is a small mini-GPS
device (about the size of a CD case) and it will record the customer’s
driving habits and charge him accordingly. The main things it can record
• The number of miles that the car is driven
• Where the car is driven
• The time of day when the car is being driven
Every month, the insurance company will send the customer a bill that
outlines his monthly driving record as well as charges for that period.
The client also has to pay a flat fee for other standard cover against
theft, damage and fire. This fee remains the same but the mileage charges
vary from month to month depending the client’s driving habits.
How Much Does PAYD Cost?
The cost of PAYD is dependent on most traditional factors considered by
insurance companies. Apart from these, the driving habits of the
policyholder will also contribute in a long way to the monthly payment he
There is a two tier pricing model that is based on age. As expected, those
who are 18 to 23 years old pay comparably more than those over 24 years. A
typical driver is likely to pay a flat £11 fee. Then, depending on the
number of miles driven, time of day when he is driving and the type of
road where he is driving, he can pay between .41p to .43 per mile.
Can Someone Save Money with PAYD Short Term Car Insurance?
The total monthly premiums will ultimately be determined by a client’s
driving habits. Low mileage drivers stand a greater chance of saving with
PAYD. Research has shown that drivers who cover less than 6,000 miles per
year can save up to 30% on their insurance.
Before opting to take short term insurance, it is important to research
well and compare quotes from different companies. Use insurance rate
comparison websites to find out the standard charges of the industry.
Before a client purchases a policy, he should find out whether he can save
further through discounts offered for being a good driver, being a senior
driver, being a student who maintains good grades or having his car fitted
with safety devices.