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Pay As You Drive Car Insurance

Save money on car insurance by only paying for the amount that you drive

It makes no sense that someone who drives only a few hundred kilometres per year pays as much for car insurance as someone who drives thousands. The pay-as-you-drive feature, also known as drive less pay less, is available from a handful of insurers in Australia.

If you want the advantages of comprehensive car insurance while on the road, but you don’t drive enough to make it worth paying full price, it’s worth considering switching to an insurer with options for paying based on how much you drive.

Receive quotes for pay as you drive car insurance

Details Features
Pay As You Drive
Pay As You Drive
Save up to 10% when you buy online. Only pay for the kilometres you plan to drive.
  • Choose from a range of optional extras
  • New car replacement in first 12 months
  • Guarantee on repairs for specially selected insurers
  • Lock and key replacement cover if keys are stolen
Get Quote More info
Price beat guarantee for comparable comprehensive policies for drivers aged 25 or older.
  • New for old replacement of your car - 24 months
  • Choice of agreed value of car
  • Third party property damage
  • Theft and malicious damage cover
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Pay As You Drive car insurance comparison for April 2017

You can find this feature with comprehensive policies from Real Car Insurance, Woolworths and QBE.

Insurer and optionHow does it work?
Woolworths, Drive Less Pay LessProvide your current odometer reading and top up kilometres if needed to receive premium discount.
QBE, Insurance BoxAn in-car GPS system automatically tracks your driving and determines your premium accordingly.
Real Car Insurance, Pay As You DriveGet a quote based on how much you plan to drive and top up kilometres if needed.

How does pay-as-you-drive work?

With this feature, the cost of your insurance will be based on the amount you drive. If you only do a little bit of driving, your premiums are reduced to reflect this. It works by:

  • Telling the insurer how much you drive. If it’s lower than average, this might be a good option for you. A quote is provided based on how much you say you usually drive, or how much you plan on driving in the upcoming policy period.
  • Topping up if needed. You will be given a kilometre limit based on the information you’ve provided. If this turns out to be too low, you can top up at extra cost. If you need to make a claim, but have exceeded the kilometre limit, an additional excess may apply.

Depending on the insurer, leftover kilometres may be credited to you in some form, or they will simply disappear.

The exception to this formula is QBE black box car insurance, which automatically tracks how much you drive with a special device in your car. It then uses this information and other factors to determine your premiums.

Who can benefit from the pay-as-you-drive option?

Anyone who drives less than the average person can potentially benefit from the pay-as-you-go system. Similarly, anyone who wants comprehensive car insurance but doesn’t drive enough to warrant paying full price for it may also want to consider this. Some people in particular are more likely to find themselves in these situations.

  • Seniors: It’s rare for seniors to drive as much as they used to, especially after retirement. At the same time, a higher likelihood of accidents means that comprehensive insurance is more important than ever. For older drivers, this option means that the price drops when the car isn’t being used, but it still gives you the freedom to top up ahead of time if you’re planning a longer trip.
  • Students: Students might leave their car behind when studying away from home, but they still want cover in the event of flooding, storms and other hazards. Typically, only comprehensive car insurance can provide the necessary protection, but the cost is unreasonable for a car that’s not being driven. Pay-as-you-go car insurance is a great option.
  • Under 25s: Balking at the cost of car insurance for under 25s is an Australian rite of passage. Pay-as-you-go is an effective way of reducing costs. In particular, QBE’s Insurance Box is worth considering as it can also help new drivers earn a no-claims bonus faster and can reward safe drivers with premiums that reflect their driving, not just their age group.

Pros and cons of pay-as-you-go car insurance


  • Lets you get comprehensive car insurance at a lower price
  • Means you only pay for the amount you drive
  • Can be topped up in time for road trips and other plans


  • You may be charged an additional excess for claims made when you’ve exceeded the kilometre limit
  • Only suitable for people who drive less than average
  • Requires more policy management than most typical policies

Compare pay as you drive options on finder.com.au

Picture: Shutterstock

Andrew Munro

Andrew writes for finder.com.au, comparing products, writing guides, sniffing out deals and looking for new ways to help people get the most out of their money.

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