Pay as you drive car insurance
Pay as you go car insurance is a great option for those who don't drive often and are looking to save money.
Key takeaways
- Pay only for the kilometres you plan to drive
- Light drive are rewarded for low mileage with savings on their premium
- Get the same protection as a comprehensive policy from your insurer, but generally for less money
What is pay as you drive car insurance?
Pay as you drive is a comprehensive insurance policy that calculates your premium based on low mileage.
Many regular insurers will let you insure your car for a minimum of up to 15,000km. With specific pay as you drive policies you can choose coverage for fewer kilometres, like 5,000km, which can lead to savings on your premiums.
You'll get all the benefits as a comprehensive policy with the same provider but generally for a cheaper price.
Some insurance companies advertise specific pay as you drive policies for lower mileage drivers, while others simply offer a regular comprehensive policy and will give you a cheaper premium for a lower estimate of yearly kilometres travelled. Either way you can be rewarded for driving less.
In our research of six providers, pay as you drive was only available for comprehensive policies. We didn't find any providers who offered pay as you drive cover for third party policies.
How does pay as you drive car insurance work?
Basically, pay as you drive insurance charges you a lower premium if you drive less than the average, and more if you drive more. Though the details can vary by provider, here's how it generally goes.
- Estimated kilometres. Your premium is based on a number of kilometres you expect to drive annually.
- How do I estimate how far I drive? A great way is to track how far you travel in an average week and multiply by 52. You can use a tracking app on your phone or even your car's odometer. Don't forget to include any potential big trips or vacations that'll see driving long-distance.
- Distance travelled. You'll share your odometer reading with your provider. Your expected kilometres are then added on top and this is considered your expected end reading.
- Distance top-ups. If you use up all your kilometres or you expect to go over, you can contact your provider and add extra kilometres for a fee.
- Going over your limit. If you go overboard or your insurer thinks you've
underestimated your usage, you might face extra fees or even have claims denied.
Compare pay as you drive car insurance options
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Finder Score for car insurance
We analyse over 100 car insurance products and rate each one on price and features. What we get out the other end is a nice round number between 1 and 10 to help you start comparing.
To make sure we're comparing apples with apples, we collect quotes for 8 different personas, then work out the value of 19 different car insurance features. Our team then does some fancy maths to get the Finder Score, taking both price and features into account.
Is it cheaper to buy a pay-as-you-go-policy?
Using the same driver profile, we requested multiple quotes from over 20 different car insurers, while changing the estimated mileage in a year. While not all insurers offer a specific pay-as-you-go policy, we found 6 brands who do in 2024:
- Real
- Australian Seniors
- Ahm
- Everyday
- Budget Direct Low KM
- Huddle
Between 15,000km and 5000km of expected distance travelled we found customers saved an average $576.64 across pay as you drive policies. The highest savings we saw was $849 with Everyday Insurance.
| Brand | 5,000km | 7,000km | 15,000km | 30,000km | Potential saving between 30km and 5km | Get a quote |
|---|---|---|---|---|---|---|
 | $864.24 | $918.36 | $1,022.03 | $1,146.02 | $281.78 | Get quote |
 | $870.30 | $988.20 | $1,533.30 | $1,719.30 | $849.00 | More info |
 | $1,161.16 | $1,314.12 | $1,801.89 | $1,947.53 | $203.76 | More info |
 | $1,094.11 | $1,237.89 | $1,696.37 | $1,833.28 | $739.17 | Get quote |
 | $811.18 | $921.06 | $1,429.14 | $1,602.49 | $633.78 | More info |
 | $771.20 | $875.67 | $1,358.72 | $1,523.52 | $752.32 | More info |
*Quotes accurate as of 20 August, 2024. Based on a driver profile of a 40-year-old woman, living in Sydney. Car details were for a 2022 Ford Fiesta, with an excess set as close to $800 as the insurer would allow.
Pros and cons of a pay as you drive policy
As with any policy, there are upsides and downsides to pay as you drive coverage. You should consider both before committing to a policy.
Pros
- Get comprehensive cover for less
- Flexibility to top up or reduce kilometres if your driving habits change
- Be rewarded for driving less with savings on your premium
Cons
- It's not for everyone. If your mileage varies a bit, sticking with a regular policy might be your best bet.
- Driving more than expected can lead to extra fees or even having your claim denied
- You'll need to pay close attention to your driving habits - it's not set and forget
Is pay as you drive insurance right for me?
Our expert says
"A pay as you drive policy can be great for those who are driving less than 15,000km per year. However, it's worth knowing that a lot of regular insurers charge a lower premium when you drive less kilometres. Compare a few options from pay as you drive providers and normal providers to be sure that you're getting the best deal."
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