Pay-as-you-go car insurance

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.

Some insurers offer a black box which you’ll need to get 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.

Pay-as-you-go car insurance can be cheaper than a standard policy – it really depends on how, when and where you drive.

You might find pay-per-hour cover isn’t as useful in a big city where you might often be sat in traffic, but if you’re a low mileage driver you could save money with a pay-per-mile policy.

Likewise if you’re in the country and you’re often driving fast along open country lanes, pay-per-mile cover might work out less economical than a pay-per-hour policy.

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.

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 

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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