New technology, aptly named ‘Insuretech’, is looking to take the world by storm by making a wide range of insurance policies cheaper, from cars and bikes to golf clubs and musical instruments. We look at the ways car insurance is changing to suit how today’s motorists drive their cars.
Pay by the mile
One method this technology has put forward facilitates a policy which only requires the driver to pay for the miles they drive. Subsequently, someone who is driving 4,000 miles a year will pay significantly less than someone driving 20,000 miles. This method not only serves to potentially save infrequent drivers money, but it may also cause drivers to think twice about whether their journey is really necessary. This could result in people taking more eco-friendly options such as walking or using public transport.
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The logistics
The driver pays a fixed fee, plus a deposit, which covers them for fire and theft and includes a black box which monitors their journeys. The cost of making a journey then depends on the number of miles you drive. In one example, the cost per mile is 3.4p, and the driver is notified of the total cost of a journey once it has come to an end.
‘By Miles’, a business which currently provides this cover, believes that any driver who drives less than 7,000 miles per annum will save money by using this type of policy. It appears to be an option which is more desirable to those living in urban locations who do not use their car for a daily commute.
Pay by time
Another method is to pay for a fixed period of time, by the month, week, day or even the hour. This option is handy if you need to drive someone else’s car for a one-off journey or if you’re a student needing to use a friend or relatives’ vehicle during the holiday period.
Motorists are required to take a picture of their driving licence, along with a selfie of them by the car they’re wanting to drive, with the number plate in view.
The cost
An hour’s worth of insurance will typically cost approximately £10, with a day working out between £20 – £30. This policy only really suits one-off occasions. Anyone who drives more than a couple of times each month will probably not find this policy benefits them financially.
A criticism of this type of cover is that it may encourage motorists to drive faster and to exceed speed limits if they only have an hour time frame in which they are insured. Furthermore, the company does not stipulate a black box which means that drivers can exceed their allocated time frame, meaning they could be driving uninsured.
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