Do I need car insurance?

Do I need car insurance?

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Do you only drive a few kilometers a year but still have to pay a considerable amount for your car insurance? You may be able to reduce your costs by purchasing pay as you go (PAYG) car insurance.

Here’s everything you need to know about this type of policy to help you decide if it’s right for you.

What is car insurance and how does it work?

It’s a policy designed so that you only pay for coverage when you use your car.

The idea is very simple. You pay a monthly or annual flat fee to cover basic fire and theft insurance elements, and then a surcharge for every mile or hour you drive.

Like it black box insurance, a tracking device, usually a small black box, is built into your car. The device keeps track of and records your journeys, including the number of miles or hours you have traveled on the road. The amount that you have to pay is then calculated on the basis of this information.

What types of reward insurance are there?

Pay per kilometer insurance

As the name suggests, you pay an amount based on the number of miles you drive during the insurance period.

Pay per hour insurance

With hourly wage insurance, the time (in hours) that you spend on the road is charged.

Temporary car insurance

This is where you take out short-term car insurance that only provides cover for the short time that you use the car. You can take out a temporary policy for only one hour and a maximum of one month.

Such insurance can be useful if, for example, you borrow someone else’s car to drive for a short period.

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Can it save you money?

Yes. With standard car insurance, you usually pay a fixed premium, regardless of how often you drive.

That means that if you only drive in a blue moon once and only travel short distances (for example, to get to the local shops), you may be paying more on your auto insurance premiums than you need to. With pay as you go you only pay for the kilometers or hours you drive. This can potentially lead to lower premiums.

The actual amount you can save will depend on your personal circumstances, including how often you drive. But savings can be significant. In fact, a study has been conducted by thought that UK drivers could have saved up to 48% (£ 783) on their car insurance via PAYG in 2020.

Who is it best for?

Pay-as-you-go isn’t for everyone, but it can help lower insurance costs for:

  • Drivers who spend little time driving because they benefit from cheaper premiums
  • Young drivers who don’t drive often, but who still have to pay high insurance premiums because of their lack of experience and an increased risk of accidents
  • Drivers with driving convictions in their records, who usually pay high premiums

If you belong to one of these categories of drivers, it is worth considering auto insurance.

But if you drive long distances every day or often, you probably won’t benefit from pay as you go. Maybe you should stick with traditional car insurance.

How much is it?

How much it costs depends on the insurer, the type of PAYG you are going for (for example PAYG insurance per hour) and of course how often you drive and how long you drive.

If you think PAYG is the right move for you, the easiest way to get the best rates possible is to shop around and compare quotes from different insurers. You can use auto insurance comparison sites or contact insurance companies directly.

Don’t forget to read the fine print carefully before signing up for a policy. It is important to understand exactly what you are agreeing to.

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