Should You Switch to Pay Per Mile or Usage Based Car Insurance?

by | Jul 13, 2020 | Finance, Travel


Car insurance –

is something that you are going to need to make the most of while you have the opportunity to make some savings. It is a legal requirement for drivers, and this is why you need to ensure you get the right car insurance sorted out as well as you possibly can. There is plenty you need to consider when it comes to making the most of this, and that is something that you need to think about.

Try to do as much as possible to understand the different types of insurance that exist for drivers, and what you can do to save money on these premiums. Now, one of the important things you need to determine is what types of car insurance would work best for you, and one of the less common but potentially more rewarding options would be to go with pay per mile, or usage-based, car insurance. It’s important to understand what this is, how it works, and what exactly makes it the perfect option for you.

What is pay per mile?

Generally speaking, regular car insurance premiums are based on estimations from the insurance companies about how you’re going to use your car, as well as plenty of other factors. However, this can often result in people having to pay premiums that are way off in their estimations. Yes, there are plenty of factors that apply to all forms of car insurance, and things like your age, location, the type of car you have, how much you earn, and even your relationship status can be determining factors in how much car insurance you can expect to pay.

Now, the way in which pay per mile car insurance works is that the premium amount is based on how often you use the car. Essentially, your insurance is calculated based on the actual usage of your car, and this seems like a much more structured and logical way of doing it. So let’s look a little closer at how this type of insurance works.

How does it work?

Usage-based car insurance is becoming highly popular because of the fact that it has a lot of benefits for people. This is a much more modern form of insurance, and it embraces modern technologies in order to basically offer a pay as you go approach to car insurance. Companies can use a device plugged into your car, or even an app on your phone, to try to figure out how much insurance you are due to pay. Information will be collected and used to work out and determine your bill.

This is quite fun because it means that you have a customized rate just for you that is based on your vehicle usage. Knowing and understanding the implications of this is really important for allowing you to decide if this is the right approach for you. There are a lot of things that play a factor here, and the fact that you get a premium specific to you is very appealing to a lot of drivers.

 What are the benefits?

There are a lot of benefits when it comes to pay-per-mile, and one of the main ones is that it can potentially save you a lot of money. However, you need to be careful here, because this is something that can backfire. You see, due to the manner in which insurance companies collect your data and come up with a premium specifically for you, it means that the less you drive, and the safer you drive, the better it will be for your wallet.

This does of course mean that the opposite is true, and the more you use the car, or the more reckless you are, the more your premium goes up. Sometimes you can’t avoid using the car a lot or getting into an accident on the roads, so it is something you need to make sure you think carefully about. People often prefer to have this sort of insurance because they find that it works better for them, and it’s fairer.

 Is it right for you?

Well, one of the key things you need to figure out is whether switching to pay per mile car insurance is the right approach for you and whether you will benefit from doing this. To be honest, this largely depends upon the type of driver you are. If you are someone who drives less than the national average of 12,000 miles per year, you would be the ideal choice for this sort of usage-based car insurance.

If you are an infrequent and sensible driver you can wind up saving a good deal of money from switching to a pay per mile format. However, it is important to make sure you are following the parameters, because if you wind up driving too much, or you get into an accident, then you could wind up spending more on your insurance than you regularly would. 

If you want to switch to pay per mile car insurance and reap the benefits of this, then you need to make sure you take the right steps. First of all, make sure you are absolutely positive that this is the right step for you to take. You also need to make sure you look at the different companies that are offering usage-based car insurance. Make the most of this, and try to come up with different ways of helping get the best possible insurance premium you can.



Downtown Magazine