Driving Insurance Charges

Shopping around for motor insurance is a great way to save cash, but you could also cut costs with a range of alternative insurance models. Several companies now offer a pay-as-you-go or payby-mile policy. This means that rather than paying a set premium for the year, customers pay a varying amount depending on how much they actually drive. It’s certainly an approach many would have appreciated in 2020, when car use slumped during lockdown. Such policies aren’t quite as simple as they seem. The per-mile rate will still take into account risk factors such as car model and driving experience. There’s also a fixed fee that applies even if you don’t drive at all, designed to cover such risks as your car being stolen. Whether such policies work out cheaper depends on individual circumstances. As a rough rule, they are most likely to suit people driving less than around 6,000-7,000 miles a year. Customers of pay-per-mile policies must fit a device (sometimes dubbed a black box) to their car, which simply measures distance. However, some specialist policies offer cheaper deals that use more extensive data to assess risk. These telematics policies usually offer discounts, either at annual renewal time or on monthly payments, based on the way the customer drives. Factors that can reduce premiums include shorter journeys, keeping to speed limits and avoiding sudden braking, and driving at safer times such as during daylight but outside of rush hour. Telematics deals are most suitable for young drivers who’d normally be charged extremely high premiums based on industry assumptions about their risk level. Some insurers will only cover young drivers on such a policy. If you take out a telematic or ‘black box’ insurance policy, you need to read the conditions carefully. Some will simply offer discounts when you drive in a less risky way. Others use the data to enforce conditions such as only driving a certain amount or not driving after a ‘curfew’ time. Breaching these conditions won’t usually invalidate the policy but will instead make you liable for higher premiums. Another option to save on premiums is to take and pass an advanced driving course. These cover topics such as driving in extremely busy traffic or coping with adverse weather such as heavy rain or wind. They often put more emphasis on observation and anticipation of potential hazards. In theory, passing such a course qualifies you for lower premiums, particularly where you’d otherwise face steep charges based on age or experience. The problem is that there are several different courses and qualifications available and not all insurers recognise all qualifications. The IAM Roadsmart and Pass Pluss qualifications are the most commonly accepted, but you will need to check with each insurer. Another limitation is that the cost of taking an advanced driving course may outweigh or limit the savings on insurance premiums. For this reason, experts advise that you shouldn’t consider such courses solely as a money-saving exercise and instead take into account the inherent benefits of becoming a more skilled and confident driver.