Pay As You Drive (PAYD) Car Insurance Explained

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How Pay As You Go Car Insurance  (PAYD) Can Save You Money

We have had pay as you go mobile phones for many years but many will be surprised at how this trend has moved into car insurance. Pay as you go car insurance, otherwise known as PAYD, is now officially in the mainstream.  This type of cover does what it says and charges you for how much you drive as opposed to the type of general car insurance most will be used to.

With young drivers especially paying huge premiums when they first start driving, it was long overdue that insurers would find a different way to charge. PAYD means that drivers now will pay according to the volume of miles they drive and also according to the danger of these roads. It is ideal for people who do not drive that much and tend to drive on safer and slower roads. Those people who use their cars for work , who drive a lot or who tend to drive on motorways and roads with more accidents would be more advised to use traditional policies. Obviously policies change from pay as you go car insurance for 18 year olds to say pay as you go car insurance under 21.

How It  Works

With pay as you drive, most insurers will ask you to select the amount of miles you want to have in your miles bank for the year. You can then buy additional miles as and when you need them. Your driving will be reviewed periodically and your premium or cost per mile will then be adjusted accordingly. Drive well and on safe roads and you will find that your premiums will be much lower than with a regular policy. If you are more prone to speeding or driving a little more recklessly then you are better off avoiding payd.

Some insurers who offer this type of cover are insurethebox, Ingenie and even the AA Drivesafe who have introduced their own telematics insurance product recently.  Each insurer will require you to have a black (telematics) box installed in your car. This will track your driving and miles used and let the insurer know which roads you travel and your overall driving style. Some insurers will do this tracking via a mobile phone application which have been reported to be up to 99% as accurate as a box in your car. The apps are certainly the future of measured driving but also mean that you have to make sure you have your phone, that it is charged and that the app is activated. Failure to do this will result in your car insurance being voided.

Consider the above when applying for pay as you go car insurance for learner drivers and read a pay as you go car insurance review.

To get quotes on your PAYD insurance, take a look at our telematics comparison page located here.

 

Read more about Pay How You Drive Insurance in our other guide here.

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Robert Prime launched telematics.com in early 2013 and has over 10 years experience in the financial sector. He specialises in business startups and online marketing with a passion for new technology.