Every driver dreads the hassle of renewing their car insurance each year — especially as costs soar.
The average fully comprehensive car policy costs £503 — around 17 per cent higher than in 2013. And that’s after an unexpected £70 dip in average prices in the past three months.
Having to fork out a hefty sum every year is particularly annoying if you only use your car at weekends or on the odd trip.
The average fully comprehensive car policy costs £503 — around 17 per cent higher than in 2013. And that’s after an unexpected £70 dip in average prices in the past three months
As a result, insurers are now launching pay-as-you-go cover for occasional drivers.
Analysis by Money Mail found these deals can save weekend drivers as much as £225 a year. It all depends on how much time you’re actually on the road.
HOW PAY-AS-YOU-GO INSURANCE WORKS
Insurers who offer pay-as-you-go (PAYG) deals say your car is most at risk of being involved in an accident when it is being driven — so you should pay less if your car is parked up most of the time.
By law, all cars need to have at least third-party insurance even if they are left on a driveway or in a garage for 365 days a year, unless the owner obtains a Statutory Off Road Notification (SORN).
This means you will still need a basic form of cheap cover to keep your car legally insured while it is parked, but can then use PAYG insurance for whenever you drive.
To work out whether you could benefit, you’ll need to estimate the number of hours, on average, you drive each week.
CHARGED FOR EACH HOUR YOU DRIVE
Once you have registered with a pay-as-you-go insurer using an online form, you activate cover by the hour, day, week or month by telephoning its call centre or using a smartphone app.
An insurer called Cuvva offers a monthly subscription service from £11.32 for registered owners, which means their car has the basic third-party cover required by law.
You then use an app to add on driver’s cover.
The exact amount you will be charged — and how much you’ll save — will depend on your circumstances, such as age, where you live and what type of car you drive.
Prices start from 90p an hour or from £2.69 a day (this is the maximum you’ll pay per day even if you select the hourly option). These prices are for a middle-aged driver with a smaller car, living in low-risk postcode.
If you use your car mainly for weekend trips and popping to the shops, you’d pay around £275 a year in total.
That’s £228 cheaper than today’s £503 average annual policy. You’ll need to work out your exact potential savings by shopping around.
Money Mail calculations show the pay-as-you-go plan typically works out cheaper if you drive for fewer than 137 days a year in total — or between two and three days a week on average.
If you prefer to think in hours, you’d typically save if you did one hour a day, seven times a week.
Marie Mitchell, 35, has saved around £250 a year using one of these policies. Previously, the housing adviser from Gillingham, Kent, paid around £800 annually to insure her Ford Fiesta.
By law, all cars need to have at least third-party insurance even if they are left on a driveway or in a garage for 365 days a year
However, she now pays a basic subscription of £20 to 25 a month to keep her car insured and around £1.60 an hour or £5.30 a day on top when she drives.
Marie, who is expecting her third child, walks to work and uses the car only about once a week for occasional hospital appointments or big supermarket shops.
It means her annual insurance bill now costs around £545 — a saving of a third.
She says: ‘With my old insurance, I had to pay a large amount on direct debit each month whether I used the car or not, but now, if I need to save, I can use the car less, which really helps.
‘It also makes you think about whether you need the car or if you could walk instead, which is better for the environment.’
Cuvva allows users to drive any insured car for a few hours or days using the app. This can be useful if friends or family come to stay or even for adding a carer to an elderly relative’s insurance so that they can take them out for the day.
Costs vary depending on the driver, but it is around £12 for the first hour or £14 for the day for a 22-year-old female driver to be covered on her parents’ car.
You must remember to activate the cover every time you make a trip or you will be committing a criminal offence.
Insurer By Miles also requires drivers to pay a fixed annual cost for basic protection and then charges drivers for full cover from around 5p per mile, using a black box to track exact mileage.
COVER FOR LEARNERS
Parents of learner drivers can avoid the eye-watering annual premium costs and protect their no-claims discount by using PAYG insurance instead of adding their teenage offspring on to their annual policy.
Insurer Marmalade allows learners to be covered on their parents’ cars when they need it, without affecting the owner’s policy.
You need to sign up online initially and pay for a 30, 60 or 90-day policy. Once this has finished, you can take a break or renew at any time for periods of seven, 14, 30, 60 or 90 days by clicking a link in a renewal email or calling customer services.
Using Marmalade, a 17-year-old learner driver living in Surrey could be insured on his parents’ car for three months for around £151.39.
This is equivalent to just over £600 a year — nearly half the average cost of £1,179 for an annual policy for a 17-year-old.
Matt Oliver, of GoCompare, says: ‘These policies are worth considering to protect a no-claims bonus.’