Pay As You Drive Car Insurance - Is it right for you? | Finder

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
Woolworths Drive Less Pay Less
Optional
Market
Only pay for the kilometres you plan to drive.
ahm Comprehensive with Fixed Kilometre Plan
Optional
Both
ahm's Fixed Kilometre Plan is available as an add on with comprehensive cover
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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
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 plus you will get 15% discount on first year's premium when you take out a policy online. 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.
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 unless you add it as an option, 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.
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.
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.
Woolworths Comprehensive
Optional
Agreed or Market
Finder's summary: Woolworths catches our eye due to some unique perks like a price-beat guarantee, where it'll beat any current comparable comprehensive renewal notice if you're over 25. You'll also get 10% off your grocery shop once a month and can add roadside assistance onto your policy for just $7.35 per month.

Who it might be good for: Woolworths shoppers and those that want to take advantage of its price-beat guarantee.
Qantas Comprehensive
Optional
Optional
Agreed or Market
Finder's summary: You'll be able to choose how comprehensive you want your cover to be with optional extras like choice of repairer and the option of agreed or market value. Plus earn Qantas Points for joining and paying your premium. Sign up by 2 May 2021, you can earn up to 30,000 Qantas Points (points awarded will be based on your premium). T&Cs and eligibility apply.
ahm Comprehensive
Optional
Both
Finder's summary: ahm comprehensive car insurance lets you choose higher excess to reduce your premiums plus you can get up to 15% off when you purchase a new car insurance policy. T&Cs apply. Additionally, their Fixed Kilometre Plan can save you up to 30% compared to their standard comprehensive cover.

Who it might be good for: People who drive less than 15,000 km per year.
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. Get 15% off on your first year’s premium when you purchase a new eligible comprehensive car insurance online. T&Cs Apply.
QBE Comprehensive
Optional
Agreed or Market
Finder's summary: QBE is a sustainable insurance company and also Finder's Green Insurer of the Year 2020 Award winner. This policy offers the highest level of protection available from QBE including three-year new car replacement. You can also save $75 when you purchase a new comprehensive policy online. T&Cs apply.

Who it might be good for: Those that are looking for a more environmentally friendly insurance choice.
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. Get $50 cash back when you purchase online between 1 April – 30 June 2021 using the code STELLA50. T&C apply.

Who it might be good for: Someone who wants a female-centred car insurance policy (it will cover men too).
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
Australia Post Comprehensive
Optional
Agreed or Market
Finder's summary: Australia Post car insurance offers comprehensive cover for things like theft, fire, new for old replacement and emergency accommodation and transport. Cover also extends to anyone who uses your car, not just you.

Who it might be good for: If multiple people use the one car and you don’t want to worry about listing all drivers.
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