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Drivers could have saved up to 48% by using pay-as-you-go insurance in 2020

  • On average, PAYG policies were 36% cheaper than traditional ones in 2020
  • The average driver will have reduced their mileage by almost 800 miles this year
  • However, drivers who pay low premiums could save more by sticking to traditional policies

24, November, 2020, LONDON –

Brits could have saved up to 48% on their car insurance in 2020 if they had been signed up to pay-as-you-go (PAYG) insurance as opposed to traditional annual policies.

150 quotes were analysed by the personal finance comparison site, which found the average saving on PAYG policies to be 36%.

This works out as a reduction of £292 over the year, with the average annual policy coming in at £800 and the average PAYG policy costing £508.

One of the factors making PAYG cheaper was the fact that fewer miles have been covered by drivers in 2020. It is predicted that Brits will have reduced their mileage by 16% in 2020, down from 5,000 miles to 4,200.

When this is broken down to the average cost per mile for each policy, a PAYG deal in 2020 would have cost you 12p per mile, vs 16p per mile for traditional insurance.

To work out the different premium costs, collected quotes for the UK’s 10 most popular cars of 2020, for three different (fictional) people who live in an expensive, a cheap and an average location for insurance premiums. The age, profession and driving history of each driver was also tailored to ensure they were a particularly cheap, expensive or average priced person to insure.

Insurance scenarios for a range of drivers

The fictional driver who is expensive to insure is a 25-year-old with only 1 year of no claims and is from the UK’s most expensive area to be insured: London. For this person, the average cost of a traditional annual policy across the 10 cars was £1,628, while the average quote on a PAYG policy in 2020 was £845. This would result in a saving of £783, or 48%.

The person who would cost an average amount to insure is 35 years old, lives in Newcastle and has 5 years without filing a claim. Their average annual policy cost £568 compared to £373 on a PAYG policy. This would give them a saving of £194 or 34%.

The cheapest person to insure lives in Galashiels in Scotland, and is a 60-year-old who has had no claims over the last 20 years. In this case, it would actually be cheaper to get a traditional policy. This would have only cost an average of £204 in 2020, whereas a PAYG policy would be £305 – an extra expense of £102 or 50%.

Insurance quotes in a typical year

If you took a typical year, where drivers cover 5,000 miles, PAYG would still work out 31% cheaper on average across the 150 quotes.

The average cost for this type of insurance would rise to £555 (an increase of £47), but this would still be £245 cheaper than the traditional policy.

The higher-cost individual would see a 43% saving on average for a PAYG policy while the person who falls within the average bracket would be able to save 28%. The lower-cost person would again be able to save a lot more if they took out a traditional policy. It would be 62% cheaper for them to do this.

The full paper, Changing lanes: Car insurance for the new era, includes expert commentary from industry leaders and can be viewed and linked to here.

Commenting on the findings, Danny Butler, insurance publisher at said:

“Usage-based car insurance has surged in popularity throughout the course of the year, with customers looking to cut costs wherever they can during a time of economic uncertainty.

“The cost savings from a pay-as-you-go policy might seem like a no-brainer in the current times, but as this research has shown, this isn’t always the case for everyone. Individual circumstances such as your age, location and driving history play a huge role in determining your overall premium.

“As a starting point, I’d recommend assessing how many miles you expect to drive in the next 12 months. You should then get several quotes to assess the impact of your own personal demographics on both a PAYG policy and a traditional policy.”

Finder analysed over 150 quotes, using the UK’s 10 most popular cars of 2020 (source: AutoExpress), for three fictional people whose age, location, profession and driving history would make them a particularly cheap, expensive and average price to insure.

It is predicted that Brits will reduce their mileage by 16% (source: By Miles) in 2020, down from 5,009 miles in 2019 (source: UK government) to 4,211. This benefits those on a PAYG policy, as they would not be paying extra for the reduction in driving. Therefore, PAYG policy quotes were calculated using the reduced 4,211 miles, while normal policies were calculated using the normal average mileage per driver of 5,009. PAYG quotes were calculated using By Miles quote system, while normal policies quotes were calculated using’s quote system.


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The information in this release is accurate as of the date published, but rates, fees and other product features may have changed. Please see updated product information on's review pages for the current correct values.

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