Pay as you go car insurance launches in the UK – Here’s everything you need to know

Car ownership can feel less fit for purpose for a city dweller than someone who lives in a rural area or smaller town.

A new method of car insurance has now been launched in an attempt to appeal to people living in a city.

It is a radical new plan that could shake up the way people insure their cars, as it works on a pay as you go basis.

How it works is that will charge car owners a fixed annual fee to cover their cars while parked, then bill them monthly, based on the number of miles that they actually drive.

James Blackham, co-founder, and CEO explains: “Car insurance is a product that’s barely changed in 30 years. We want to make car insurance fairer, and the whole experience of owning a car much easier.

“Every extra mile you drive adds to the risk of an accident. We think it’s high time that this is reflected in the price infrequent drivers pay.

“I’ll know we’re getting somewhere when one of our customers walks into the pub and tells their friends ‘You know, I really love my car insurance’.”

According to By Miles, who is behind the new insurance method, said that it is ideally designed for motorists who travel under 7,000 miles a year or 140 miles per week in their cars.

It has been likened to mobile phone contracts and could see drivers save cash based on the miles they end up driving in a month.

The firm also suggests there could be an environmental impact as drivers will be forced to weigh up whether or not to take their vehicle on a trip.

Annual charges will start from £150 a year and driving will be billed from 3p a mile.

Using this example, someone driving 4,000 miles a year with this policy would pay £270 for a year’s fully comprehensive cover.

Essentially, the less you drive, the lower your insurance is but rates will vary based on the model of car, its age, where is parked and the driver’s experience.

A tracker is installed in the car to record how many miles are drivers each trip which can then be sent to a smartphone or computer in mounts.

Callum Rimmer, co-founder and CTO, said: “We’re determined to create a more relevant product for customers, as the way we drive changes.

“While our policies work well for low mileage drivers today, they can be adapted as car use evolves, with the rise of autonomous or shared vehicles.

“We want By Miles to be the dominant insurer in the brave new world of motoring that’s just on the horizon.”