Car Insurance: Pay-per-mile Insurance In 5 Questions

If you are one of the drivers who use their vehicle infrequently on a daily basis, pay-per-mile insurance could save you money. We will explain what this type of car insurance entails in 5 questions.

1- What is the principle of pay-per-mile insurance?

Unlike a traditional car insurance with a fixed premium, a pay-per-mile car insurance allows you to pay only for the miles driven.

The amount of your insurance premium depends on how much you use your vehicle. In other words, the less you drive, the less you pay!

This type of insurance, which originated in Anglo-Saxon countries under the name "pay as you drive" (PAYD), is now offered by most car insurers in France. It is particularly advantageous for low-mileage drivers.

2- How does pay-per-mile insurance work?

When you take out pay-per-mile car insurance, the cost of your premium is variable because it is calculated based on the distances you travel over the year.

Note, however, that there are two forms of pay-per-mile car insurance:
• either the mileage package, with an additional cost if you exceed the chosen package.
• or per-mile pricing, with an average cost ranging between 1 and 4 cents per kilometer.

The mileage package allows the motorist to drive a certain number of kilometers per year. The insured must commit to not exceeding this number of kilometers with their insurer, for example, 5000 or 10,000 km per year, under penalty of paying a fee. With this option, it is sometimes possible to adjust your mileage package during the year if needed.

Per-mile calculation requires mileage monitoring, carried out by a mechanic once a year or done using an onboard electronic device. This device installed in your vehicle automatically transmits the distances traveled over a given period to the insurer, allowing them to adjust the amount of your premium.

3- Who is pay-per-mile insurance for?

Pay-per-mile car insurance is aimed at motorists who use their vehicle infrequently or only for short distances.

This option can be appealing for families with multiple vehicles who want to insure an additional vehicle at a lower cost. It is particularly suitable for young drivers, as well as city dwellers, remote workers, and the elderly.

In practice, you are considered a low-mileage driver by an insurance company if you drive no more than 5,000 km, or even 10,000 km per year.

4- What are the benefits of pay-per-mile insurance?

The main advantage of pay-per-mile car insurance is financial. Policyholders who rarely use their car can save 30% compared to a traditional car insurance policy.

However, it should be noted that this formula does not mean you will be insured “on the cheap.” The coverage offered by pay-per-mile insurance is the same as that of traditional contracts. Only the billing method differs.

When subscribing, you have the choice between third-party insurance, intermediate insurance, and comprehensive insurance. You can even choose different coverage extensions based on your needs. In summary, this more economical formula does not prevent you from benefiting from perfectly tailored coverage.

Pay-per-mile insurance can even help you be better insured by giving you the option to take out comprehensive insurance or customized insurance while paying less. Since you drive less, insurers are willing to charge you less for your contract because your driving profile implies a lower risk for the insurance company.

5- What are the disadvantages of pay-per-mile insurance?

When subscribing to pay-per-mile insurance, you must be sure not to exceed the chosen mileage allowance. One of the drawbacks of this plan is the risk of incurring a penalty in the form of an additional cost...

To avoid any unpleasant surprises, remember that the mileage threshold not to be exceeded is a key element for this type of car insurance to remain appealing. You should always keep this number in mind, especially if you share the driving with one or more other members of your household.

If you opt for the per-mile formula with an onboard electronic device, you should know that canceling this car insurance will cost you approximately 60 euros for uninstalling the control device.

However, even with this connected device in your vehicle, you do not have to worry about the security of the data transmitted to your insurer. In France, insurance companies offering Pay as you drive plans must obtain approval from the CNIL, the National Commission on Informatics and Liberty. Your data is protected because the CNIL oversees the collection and use of this personal information.