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.
Which insurers offer specific pay as you drive car insurance?
We have compared 5 providers below, however there may be more available in the market. Be sure to compare quotes from multiple providers to help you find the best deal for your needs.
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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:
*Quotes accurate as of 26 July 2022. Based on a driver profile of a 40-year-old woman, living in Sydney. Car details were for a 2020 Ford Fiesta, with an excess set as close to $800 as the insurer would allow.
Any time you find you're regularly driving less, pay-as-you-go cover is worth considering. Savings with these policies can particularly add up if you drive between 5,000 and 10,000 kilometres annually. You'll often get comprehensive cover with these types of policies. But no 2 policies are the same, so do check the insurance is enough for your needs.
Finder survey: How do Australians pay for their car insurance?
Response
Annually
56.26%
Monthly
36.78%
Doesn't apply
6.96%
Source: Finder survey by Pure Profile of 1006 Australians, December 2023
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.
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 number 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 kilometres, you can contact your insurer and top up your policy. Some insurers will even credit any unused kilometres 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 kilometres, or your insurer thinks you deliberately underestimated your usage, you may have to pay an additional excess for any claims, or you could even have your claim refused.
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.
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.
Pros
Can get comprehensive cover at a lower price
Rewards those who don't drive very often or very far
Can be topped up or reduced if your driving habits change
Cons
May be charged an additional excess, or have your claim denied, if you exceed the kilometre limit
Only suitable for people who drive less than average
Compare regular car insurance policies
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Frequently asked questions
Many providers offer well priced cover for low mileage drivers. What's best suited for your budget will depend on many factors including; how many kilometers you drive, your age, gender, location and more.
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Nicola Middlemiss is a contributing writer at Finder, with a special interest in personal finance and insurance. Formerly a business and finance journalist, Nicola has written thousands of articles helping Australians better understand insurance and grow their personal wealth. She has contributed to a wide range of publications, including Domain, the Educator, Financy, Fundraising and Philanthropy, Insurance Business, MoneyMag, Mortgage Professional, Yahoo Finance, Your Investment Property, and Wealth Professional. Nicola has a Tier 1 General Insurance (General Advice) certification and a Bachelor's degree from the University of Leeds. See full bio
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Nicola has written 237 Finder guides across topics including:
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James Martin was the insurance editor at Finder. He has written on a range of insurance and finance topics for over 7 years. James often shares his insurance expertise as a media spokesperson and has appeared on Prime 7 News, WIN News, Insurance News, 7NEWS and The Guardian. He holds a Tier 1 General Insurance (General Advice) certification and a Tier 1 Generic Knowledge certification, both of which meet the requirements of ASIC Regulatory Guide 146 (RG146). See full bio
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