Pay As You Drive Car Insurance

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

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If you don't use your car very often, or only drive short distances, you might be able to save money on your premium by finding an insurance policy that rewards low-usage.

Sometimes, these are called pay-as-you-drive policies - but they're not your only option. You can also find car insurers that offer lower premiums to people who drive less, as standard.

This guide will explain the pros and cons of pay-as-you-drive cover, provide insight into the cost compared to more traditional car insurance, and - hopefully - help you decide if it's right for you.

What is pay-as-you-drive car insurance?

Pay-as-you-drive car insurance - sometimes called pay-as-you-go - is comprehensive car insurance with a twist. You get the same level of cover, but you only pay for the kilometres you drive. It's great for people who don't drive very often, or only travel short distances.

However, while some insurance companies advertise specific pay-as-you-drive policies, there are other, less obvious ways to access a cheaper premium if you're not driving very much.

That's because some car insurers take estimated mileage into account during the quote process. So although they're not selling a specific pay-as-you-drive insurance policy, you're still claiming a reward for low usage.

If you only use your car from time to time, you might find you're better off using one of these insurers, or purchasing a pay-as-you-drive policy.

Which insurers offer specific pay-as-you-drive car insurance?

Name Product Roadside Assistance Accidental Damage Storm Choice of Repairer Agreed or Market Value
No items match the given criteria.
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Which insurers reward low mileage?

We requested multiple quotes from over 30 different car insurance brands in Australia. We used the same driver profile, but changed the estimated mileage. Not all of the insurance brands offered a reduced price for lower estimated mileage.

Here are some that did:

Average annual mileage
Brand5,000km 7,000km15,000km30,000kmPotential saving between 30KM and 5KMGet a quote
Budget Direct

$686

$709$749$809

$123

Get quote
Huddle

$608

$666$885$1055

$447

More info
Qantas

$775

$800

$845

$913

$138

Get quote
Virgin Money

$700

$723$764$835

$173

Get quote
AAMI

$548

$570$602$686

$138

More info
Australia Post

$720

$744$786$849

$129

More info
Bingle

$394

$398$398$426

$32

Get quote
GIO

$895

$914$933$1,101

$206

More info
ING

$693

$716$756$817

$124

More info
NRMA

$839

$909$927$1,024

$185

More info
Suncorp

$909

$940$960$1,075

$166

More info

*Quotes accurate as of 23 April, 2020. Based on a driver profile of a 50-year-old woman, living in Sydney. Car details were for a 2015 Ford Fiesta, with an excess set as close to $800 as the insurer would allow.

How does pay as you drive work?

There are some differences between policies but, generally, this is how pay-as-you-drive car insurance works. This type of system typically applies to any policy which rewards drivers with a lower premium for low mileage.

  • Set the amount of kilometres you expect to drive. Your premium is calculated with this figure in mind. The less you drive, the less you pay.
  • Disclose your odometer reading. Alternately, some insurers will install a device in your car which tracks how much you drive.
  • Top up if required. If you expect to go over the amount of predicted kms, you can contact your insurer and top up your policy. Some insurers will even credit any unused kms to your account, or offer a discount if you're driving less than you expected.
  • Be aware. If you don't top up but drive too many kms, or your insurer thinks you deliberately underestimated your usage, you may have to pay an additional excess for any claims, or have your claim denied. Some insurers may change your policy to a less comprehensive cover once you exceed your estimated mileage.

How much does pay as you drive cost compared to normal insurance?

Real Insurance is one of the few car insurers in Australia which offers both comprehensive car insurance, and policies aimed specifically at people who don't drive very far.

We used the same driver profile as above and requested quotes for a pay-as-you-drive policy, and a comprehensive policy. Both policies have the same level of cover, but our research found a significant price difference.

Estimated annual mileage
5,000km7,000km15,000km30,000km
Pay as you drive$597$738Doesn't qualifyDoesn't qualify
Comprehensive$923$1,031$960$,1043
Potential saving$326$293N/AN/A

Can I update my existing estimated mileage?

Yes! If your driving habits have changed and you're on the road a lot less, you might be able to access cheaper premiums from your car insurer.

Just give your insurer a call, say your situation has changed, and ask for a new quote. If you've prepaid for an annual policy, your insurer may provide a partial refund and if you're paying monthly, they may drop your premiums moving forward.

Is pay as you drive better than a normal policy?

If you don't drive very far every year, a pay-as-you-drive policy might be better for you than normal comprehensive car insurance because you get the same cover, for a cheaper price.

Just remember, you'll have to keep your insurer updated if your driving habits change, otherwise you risk extra fees or even a denied claim.

Is pay as you drive insurance right for me?

It's worth considering pay as you drive insurance if you don't drive very often or don't drive very far. Typically, this can include:

Multiple-car owners - If you split your driving between more than one car, or use another car for the bulk of your driving, a pay as you drive policy may be a good option.

Weekend drivers - If you typically cycle to work, or use public transport to commute, your kilometres will likely be much less than the average person.

Seniors - Seniors typically drive less than the average population. Why not reap the rewards and enjoy a more affordable premium too?

What are the pros and cons?

As with anything, there are some upsides and downsides to pay as you drive car insurance. You should always consider both, before committing to a policy.

ProsCons
Can get comprehensive cover at a lower priceMay be charged an additional excess, or have your claim denied, if you exceed the kilometre limit
Rewards those don't drive very often or very farOnly suitable for people who drive less than average
Can be topped up or reduced if your driving habits changeRequires more policy management than traditional policies

Compare regular car insurance policies

Name Product Roadside Assistance Accidental Damage Storm Choice of Repairer Agreed or Market Value
Bingle Comprehensive
Market
Finder's summary: Bingle consistently comes up as one of the cheaper insurers out there. It only covers the basics, so you don't get to choose your own repairer, you're not covered for personal items in the car and you won't get a hire car if your car is stolen. But this keeps its premiums low.

Who it might be good for: Someone who wants a low-cost option that covers them for the basics.
Budget Direct Comprehensive
Optional
Optional
Agreed or Market
Finder's summary: Awarded the 2019 Finder Award for the Best Value Car Insurance, this policy offers solid coverage at a low cost. Budget Direct’s claims service has received a 4.2/5 based on nearly 5,000 customer reviews.

Who it might be good for: People who want a comprehensive policy without breaking the bank.
Coles Comprehensive
Optional
Agreed or Market
Finder's summary: Coles have two-tiers of comprehensive car insurance to choose from. You'll earn double flybuys points at Coles supermarkets and you can get $10 off your Coles grocery bill every time you redeem 2,000 Flybuys points. If you're over 30, you can get roadside assistance free for a year.

Who it might be good for: Coles customers and Flybuys collectors.
Virgin Comprehensive
Optional
Optional
Agreed or Market
Finder's summary: Finalists for the 2019 Finder Awards for Best Value Car Insurance, Virgin Comprehensive provides a good level of cover for a decent price. Earn up to 10,000 Velocity Points when you purchase a new eligible comprehensive car insurance policy by 1 March 2021 and get 15% off on your first year’s premium when you buy online. T&Cs Apply.
Poncho Comprehensive
Agreed
Finder's summary: Poncho works like a monthly subscription – you pay monthly and can cancel and leave at any time. You can also list multiple cars and drivers under one policy, making it ideal for families and groups living together under one household.

Who it might be good for: People who want their car insurance month to month.
Qantas Comprehensive
Optional
Optional
Agreed or Market
Finder's summary: You'll be able to pick and choose how comprehensive you want your cover to be thanks to optional extras like roadside assistance, choice of your own repairer and the option of agreed or market value. Plus, you'll earn Qantas Points when you join and get access to the Qantas Wellness App.

Who it might be good for: People who love collecting frequent flyer points.
Youi Comprehensive
Optional
Agreed or Market
Finder's summary: Youi Comprehensive Car Insurance is one of the few providers to include roadside assistance in its policy. You'll also get access to YouiRewards which gives you discounts on furniture, parking and more. Youi also has a live chat feature on its site to talk through any questions.

Who it might be good for: People over 25 who want comprehensive cover with a focus on customer service
Stella Comprehensive
Optional
Agreed or Market
Finder's summary: Stella’s a female-focused insurer. It'll cover you if your car is damaged as a result of domestic violence. It offers higher cover for baby gear than most, with up to $2,000 cover for prams, strollers and child seats. You get a free Bauer magazine subscription when you sign up and a portion of your premiums go to supporting female-led businesses.

Who it might be good for: Someone who wants a female-centred car insurance policy (it will cover men too).
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