Auto Insurance by Mile

Nowadays auto insurance by the mile is a great opportunity to reduce your costs. This insurance is the most appropriate type in case if you have just started to leave your car more and more at the garage and take public transport. Or if you have reduced your fuel consumption, but continue to pay high premiums for a vehicle which you use very rarely.

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So called “pay-as-you-drive” or “pay-per-mile” insurance allows motorists to pay costs based on the number of kilometers traveled. The protection contribution therefore depends on the actual use of the vehicle: a particularly profitable formula for those who drive rarely.

How it works?

Rates are calculated based on the number of kilometers traveled, which can significantly lower the total cost. Instead of paying a fixed rate based on a duration (most often, a year), the driver pays his premiums according to the distance traveled in one year. This type of auto protection comes in two forms:

  • The mileage plan. It allows you to drive a certain number of kilometers a year. You therefore agree with your insurer to ride this distance, and no more. According to insurers, the distance can vary from 7,000 to 12,000 km.
  • Lower rates. They allow you to pay less if you travel less than planned. Your insurer will thus apply a reduction on the amount of your contribution, regardless of the initial formula chosen.

The Electronic On-Board Recorder

Car protection per km involves installing an electronic recorder in your vehicle. At the expense of the insurer, this tool is equipped with the latest technologies of geolocation and data transmission and provides the information in real time related to your travels (the number of kilometers traveled, the duration of the driving, the schedules and the type of roads used).

The purchase of pay-as-you-drive insurance is based on a written commitment where the driver agrees not to exceed a certain number of km. If you exceed the threshold on a few tens of km, you will not be penalized. However, if the distance traveled is significantly higher than was discussed, the additional cost applied to your premiums will lead to the increase of the total protection costs.

Thus, be careful with the choice of the year limit, because this figure is key for the determination of the pay-as-you-go formula.

What guarantees

Since the amount of premiums is calculated based on the number of kilometers traveled, the driver must have the mileage of his vehicle checked by a mechanic once a year. This operation is free and only takes a few minutes. Insurers then offer two types of payment: a monthly payment with an additional cost if the threshold was exceeded, a real price per km, which depends on the driver's profile and amount of bonuses received.

Types of Coverage

The protection by the mile offers the same guarantees as a typical car protection and has 3 traditional coverages: liability, collision and comprehensive. Each driver chooses the coverage according to his needs or adds the appropriate options. The only difference is the determination of the cost. To know exactly the amount of your coverage contribution for an offer per km, it will be necessary to fill out the car protection form.

Types of customers

Km Insurance is very popular among these categories of motorists:

  • “Rare” drivers. This type of auto protection is particularly suitable for drivers who have to travel short distances or make few trips during the year. It allows them not to spend more than they actually consume.
  • Vehicle protection. To insure a vehicle that is not designed to drive a lot (e.g. the motor coach) is a wise choice.
  • Young drivers. Teenagers can also take advantage of the protection by the mile to reduce the amount of their auto premiums. However, their cost will be increased by a tax or due to certain restrictions of the car usage (during the night and weekends, which are more conducive to road accidents).

This type of insurance provides customers with a huge amount of benefits. With car insurance calculator it would be possible to compare rates and choose the best insurer option for your area. If you are a city dweller and rarely use your car — or live in a suburb, and you have a car that basically drives from your house to the train station and back — protection per mile will be very profitable for you. Due to purchase of such protection by getting of auto and home insurance quotes, everyone can save & protect their cars, houses and at the same time save a lot.