If youíre struggling to afford annual car insurance policies, donít despair: pay as you go insurance may well work out cheaper. Read on to find out how to make the most of PAYG car insurance.
If the cost of car insurance is giving you second thoughts about owning a vehicle, you may be wondering how you can afford to keep on paying for expensive annual policies.
Thankfully, there is now another way to pay which you might want to look into – pay as you drive car insurance.
So how does PAYG insurance work and how can you make it work for you?
How does pay as you go car insurance work?
Much like pay as you go phone deals whereby you top up as and when you need to, with pay as you drive insurance you can have more of a say about how much you pay for cover.
That’s in direct contrast with the normal flat rate contracts you get with a standard policy.
With PAYG cover you have to get a telematics box (often called a black box) fitted to your car that records and reports how, when and how far you’re driving.
How does this help you? It tells your insurer more about you and your driving style, meaning they can assess your risk much more accurately – potentially knocking a load off the cost of your insurance.
However, committing to a certain driving style to knock £££s off the price may seem attractive when you first compare car insurance, but you’ll face expensive penalties and premiums if you can’t stick to it.
There are a number of important factors you must take into consideration:
Late night driving
While shopping around for car insurance pay as you go deals, you may see that some companies impose conditions about driving at night. If you drive between (e.g.) 11pm and 5am, your insurer may charge more for doing so as it’s seen as riskier.
This doesn’t apply to all insurers; some won’t increase your premiums or charge you any extra for late night driving – it’s a good idea to check if you’ll be asked to pay extra before taking out any policy.
Make sure that each policy’s conditions match how you want to use your car and discard any that don’t to filter out those that might turn out to be useless should you actually need to claim.
Installing your telematics box
The majority of insurance companies won’t hit you with an installation fee for having the box set up on your vehicle, but they could give you a timeframe within which you’ll need to have it installed. If you miss the deadline you could invalidate the policy, so aim to get if fitted as soon as possible.
Check the policy’s age limit
To compare pay as you go insurance for cars you should make sure you fall within the company’s maximum age limit.
Black box policies are slanted towards younger drivers (under 25 years old) and certain insurers may not offer cover for anyone older than this.
This doesn’t apply to all PAYG insurance companies so you should be able to find a deal with no age restrictions during a PAYG car insurance comparison.
Annual mileage limits
If you take out a pay as you go insurance car deal you also need to check whether there is an annual mileage limit in place. If there is then you will only be insured if you remain within this limit.
The amount will vary between insurers, so be sure to know exactly what you’re covered for on your policy – if you only need your car for occasional use, asking for a lower limit may even see you pay less for your premiums.
Benefits of having a black box installed
With a pay as you drive insurance UK policy you get the added benefit of having your telematics box act as a tracker, meaning if your car gets stolen it should be possible for its location to be tracked.
As the technology can tell how well you’re driving, you may be able to earn safe driving discounts if you avoid any incidents or impacts and drive carefully – and that’s in addition to building up a no claims discount.
However, the reverse is also true and if you’re deemed to be driving recklessly your premiums may well go up. Finding the right policy can be a fine line to tread.
The key is setting out the cover you want in advance, and taking a good long look at how you drive.
If a policy doesn’t fit you can forget about it there and then; for those that do meet your needs you can compare black box quotes to get a cheap deal that won’t let you down.
Find out more about PAYG cover and your car insurance options by reading our guide, How to find a cheap black box car insurance quote.