Pay-as-you-go car insurance
What is it?
Car insurance that charges you per mile
When is it best?
You do under 6,000 miles per year
Pay-as-you-go car insurance
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What is pay-as-you-go car insurance?
Pay-as-you-go car insurance is a type of policy that charges you based on how much you drive.
It’s ideal if you’re a low-mileage driver, driving under 6,000 miles a year. You might have to pay more with a standard annual car insurance policy.
🚩 Regardless of how much you drive, car insurance is a legal requirement
There are several types of pay-as-you-go car insurance:
Pay-per-mile insurance - charges you a set amount per mile driven
Pay-per-hour/pay-per-day insurance - charges you based on how much time you’ve driven
Usage-based insurance - charges you based on the way you drive using telematics or a black box device
Will pay-as-you-go car insurance work for me?
If you drive fewer than 6,000 miles a year, pay-as-you-go car insurance could work out cheaper than a standard policy.
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Who could benefit?
Students
People who usually use public transport
Remote workers
Weekend or holiday drivers
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Who is less likely to benefit?
High-mileage drivers
People who like certainty about bills
How does pay-as-you-go car insurance work?
Pay-as-you-go car insurance uses a telematics or black box device to work out how much you pay. This can be:
A device you plug in to your car
A smartphone app
The amount of data collected differs depending on whether you have pay-per-mile insurance or usage-based insurance (also known as pay how you drive insurance). The way you pay is different too.
💡 Top tip: To find the best deal, get quotes for each type of PAYG insurance, and also look at alternative short term options to compare prices.
Can I get PAYG car insurance on MoneySuperMarket?
Yes, you can usually see quotes from pay-as-you-go providers like ByMiles if you tell us you drive below 6,000 miles a year. You'll be able to tell us how many miles you drive when getting car insurance quotes.
Pay-per-mile insurance | Pay how you drive insurance | |
|---|---|---|
What data is recorded? | The number of miles you drive | How you drive e.g. harsh braking or accelerating, car speed Your mileage What time of day you drive |
What do I pay? | A set monthly amount plus a per mile rate | An annual amount * |
* Your insurer might adjust your premium during the year based on how you’re driving or wait until renewal to lower your annual premium
How does pay-as-you-go car insurance compare to other car insurance types?
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Temporary car insurance
What is it?
A short-term car insurance policy that lasts for a few hours, days, weeks, or months
When is it best?
You’re borrowing a car or making occasional trips
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Low-mileage car insurance
What is it?
A traditional, annual premium but you may get a discount for low mileage
When is it best?
You drive regularly but have below-average mileage
What type of pay-as-you-go car insurance do I need?
Pay-as-you-go car insurance policies usually offer fully comprehensive cover.
However, you may be able to find third-party only or third-party fire and theft PAYG policies.
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Fully comprehensive
✔ Highest level of protection
✔ Injuries and damage to you and your car
✔ Medical expenses
✔ Fire and theft
✔ Injuries and damage to others
✔ Legal protection
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Third-party, fire and theft
✔ Injuries and damage to others
✔ Fire damage to your car
✔ Theft of your car
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Third-party only
✔ Legal requirement
✔ Injuries and damage to others
What does pay-as-you-go car insurance cover?
Pay-as-you-go car insurance provides the same core protections as standard car insurance - the main difference is how you pay.
Based on a fully comprehensive policy, here is what is and isn't covered with pay-as-you-go car insurance:
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What's covered
Damage to your vehicle from accidents, theft, fire or vandalism
Third-party damage caused by your vehicle
Motor legal protection, which pays out for legal costs you may face related to a claim
Serious or fatal injuries - compensation if you’re seriously or fatally injured in a road accident
No-claims bonus protection - the vehicle owner won’t lose their no-claims discount if you have an accident in their car
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What's not covered
Non-named drivers - Anyone who was not named on your policy
Standard wear and tear to your car, such as worn brake pads or tyres
Drugs and alcohol - Accidents if you're under the influence (this can include prescription drugs)
Driving without a valid licence - if you’re driving after your licence has been revoked (cancelled)
Mileage beyond agreed limits may not be covered or your premium may be adjusted if you exceed the thresholds set by your insurer
Certain types of vehicles, such as classic cars, commercial vehicles, and high value cars, may not be covered
What add-ons can I get?
Add-ons will cover you for scenarios and costs that are not typically included in car insurance policies.
While add-ons like breakdown cover can provide extra peace of mind, they do come with an extra cost that will be added to your policy.
Breakdown cover
If your car breaks down, breakdown cover provides assistance at the roadside to get your vehicle moving again. This may be particularly useful if you have an older vehicle which is more likely to suffer mechanical problems than a new one. You can sometimes get cheaper breakdown cover by combining it with your car insurance.
Courtesy car hire
Provides a replacement vehicle while yours is being repaired. This is Ideal if you rely on your car daily for commuting. Courtesy car cover is often included for free in comprehensive car insurance policies.
Driving abroad cover
Your insurance may cover you for driving abroad but it may be third-party only cover so you’ll need to speak to your insurer if you want to upgrade it to comprehensive cover.
No claims discount protection
Protects your no-claims discount by letting you make a certain number of claims within a year before it affects your premiums. Building a no-claims discount will reduce your premiums over time and if you’ve had no claims for several years you might want to protect it. But you’ll need to pay extra to do so.
Key cover
You may not be covered if you lose your car keys and need a replacement.
Wrong fuel cover
This covers the cost of draining the incorrect fuel and refilling with the right fuel.
Windscreen cover
You may not be covered for windscreen damage automatically.
Personal belongings cover
This covers anything you leave in your car which is then stolen.
What are the pros and cons of pay-as-you-go insurance?
Pay-as-you-go car insurance works quite differently to standard car insurance policies, so it’s useful to be aware of the pros and cons of this type of cover:
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Advantages
Cost: Often cheaper for low-mileage drivers or high-risk drivers facing high premiums already
Flexibility: You’re not tied into an annual commitment with pay-per-mile insurance
Discounts: Telematics insurance rewards you for good driving
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Disadvantages
Expensive for high mileage: Likely to cost you more than a standard policy you if you need to drive over 6,000 miles
Age restrictions: Some providers set a minimum driver’s age
No-claims bonus: Might be unavailable or limited
Privacy: You might not like the idea of a device tracking your car’s movements
Budgeting: Although you have a set monthly amount with pay-per-mile the mileage fee you pay on top will vary
How much does pay-as-you-go insurance cost?
The cost varies depending on factors such as:
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The type of insurance
Pay-per-mile is a set monthly fee plus a per-mile charge, pay how you drive can go up or down depending on your driving habits
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When you drive
For pay how you drive (telematics) insurance, riskier late night driving will increase costs
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Where you keep your car
If you park your car off the road, ideally in a locked garage, this extra security is likely to lower premiums
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Your age and experience:
Younger and new drivers tend to face higher premiums
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Your car
The make, model and car insurance group it falls under
How does annual mileage affect the cost of car insurance?
Having a lower mileage generally makes your car insurance cheaper.
Drivers who spend less time on the road are considered less of a risk, as they aren't as likely to get into an accident as drivers who spend more time on the road.
However, our data shows that the cheapest average annual comprehensive policies are offered to those who drive between 10,001-20,000 miles.
There are a couple of reasons this could be:
Insurers correlate having limited driving experience with a higher accident risk
Some higher-risk groups, like young drivers, also tend to drive fewer miles so are over-represented in those mileage groups
🚩 These are figures for standard car insurance. Specialist low-mileage insurance, including pay-as-you-go policies, is likely to be cheaper the fewer miles you drive.
Mileage band | Average cost of comprehensive annual policy |
|---|---|
0-5,000 | £520.36^ |
5,001-10,000 | £501.60^ |
10,001-20,000 | £502.11^ |
20,001-30,000 | £578.36^ |
30,001-40,000 | £765.89^ |
50,000+ | £676.97^ |
Our expert says…
If you’re a low mileage driver or you’re a new driver facing a high premium, you should consider pay-as-you-go car insurance as it could work out cheaper for you. Having telematics or black box insurance, where a device or app monitors how the car is being driven, will reward you for safe driving whereas pay-per-mile insurance only tracks the miles you do. Make sure you check the small print for an annual mileage limit, cancellation fees or other restrictions
Sarah Tooze Car & Van Insurance Expert
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Is pay-as-you-go car insurance the same as short term or temporary cover?
Pay-as-you-go car insurance is similar to short-term car insurance, but not exactly the same. While a pay-as-you-go policy charges by the mile or by the hour, temporary car insurance policies offer the standard level of protection – and you pay a set price for a set amount of time you’ll be covered.
They can be more economical than year-long policies in certain situations – for example, if you only need cover for a day to move home, or for a month if you’re borrowing a car from a friend.
Do I need to install a black box to get pay-as-you-go insurance?
Some insurers providers offer black box insurance, but it's not always necessary to have a black box to get PAYG car insurance. Black box car insurance involves having a black box installed into your car by an approved mechanic – however they may also offer a plug-in device that goes into your cigarette lighter, or an app that uses your mobile phone’s GPS tracker.
Is pay-as-you-go car insurance cheaper than normal insurance?
Pay-as-you-go car insurance can be cheaper than an annual policy – it really depends on how, when and where you drive.
What happens to my driving data and information?
Your insurer will keep your driving data safe and secure, generally just using it to monitor your driving habits and checking any claims you make or someone else makes against you. They may also share it with their business partners, but they won’t sell it.
What isn’t covered by pay-as-you-go car insurance?
Pay-as-you-go policies are likely to have all the same standard exclusions as a regular policy – but specific exclusions you might look for include:
Commercial or business usage: You’ll likely need specialist business car insurance if you use your car for commercial reasons – you might find some pay-as-you-go providers won’t offer commercial cover at all
Track days or rallies: You may also not be able to attend track days, rallies or trials if you use telematics or pay-as-you-go cover
Device tampering: If you tamper with your device, whether it’s a black box or a plug-in device, this will almost certainly void your cover
What does the black box track?
With pay-per-mile or pay-per-hour policies it’s only the time or distance you drive that will be tracked, but for full telematic policies they’ll also track your speed, cornering, braking and other aspects of your driving performance.
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Is car insurance eligible for SuperSaveClub and rewards?
Yes, you can earn SuperSaveClub rewards when you buy car insurance through MoneySuperMarket.
This includes:
Up to £15, which you can withdraw as a pre-paid Mastercard or a gift card for brands like Sainsbury's and Amazon.co.uk
Free Days Out pass (worth £180), which gives free entry to a range of UK attractions
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To earn SuperSaveClub rewards on purchases you must:
Sign up to SuperSaveClub (it's free)
Be signed in to your account when you make the purchase
More information can be found on our SuperSaveClub homepage.
Is car insurance eligible for Price Promise?
Yes, car insurance is included in our Super Save Price Promise.
If you buy through us then find the same deal for less we will:
refund the difference
give you a gift card worth up to £20
Terms and conditions apply. More information can be found on our Price Promise page.
Reviewed on 12 Dec 2025 by
