temporary car insurance<\/a>, to help you decide which one would work best for your circumstances.<\/p>What is pay-as-you-go car insurance?<\/h3>
Pay-as-you go insurance means you only pay for the miles you drive. So, if you only use your car for the occasional trip to the supermarket or the countryside at the weekend, you won\u2019t be throwing money away while it\u2019s sitting in your driveway or garage.<\/p>
What are the different types of pay-as-you-go car insurance?<\/h3>
Also known as PAYG or usage-based car insurance, there are three main ways in which this type of cover is measured:<\/p>
- By tracking your miles.<\/b> Some providers, like By Miles<\/a>, calculate your premium by installing a small device in your car. This is similar to a black box device<\/a>, but it only tracks how many miles you drive, not the quality of your driving.<\/li>
- By hourly rate.<\/b> This cover is different from temporary car insurance in that you can insure your own car with it without having to declare it as SORN<\/a>, and just pay for the hours you spend on the road. The premiums are calculated in a similar way to the option above, but the device installed in your car measures how much time you spend driving, rather than how many miles you do. One issue could be having to pay extra for getting stuck in traffic, but topping up your hours can normally be done easily through an app.<\/li>
- By estimating miles.<\/b> With this type of cover, you\u2019re asked to estimate how many miles you are likely to drive at the beginning of each month, and your premium is calculated accordingly. If you know exactly how much you drive each month and don\u2019t want a tracking device placed in your car, this can work for you. However, if you overestimate the miles you drive, you might waste money, as there\u2019s usually no refund offered for unused miles. If you have to drive more than what you estimated, you might be charged extra.<\/li><\/ul>