Car insurance per km: How does it work?

The auto insurance industry is constantly evolving to serve its customers. The shift from paper-based insurance to a digital platform is a good example of this development. insurance car per kilometer was born out of “Pay as You Drive” car insurance. It is actually a refined version of the latter. You may be able to buy comprehensive insurance at a cheaper price. It might suit you if you don’t drive your car very often or only drive short distances. What is mileage car insurance and how does it work? More details here!

Update on “Pay as You Drive” car insurance and how it works

First of all, you need to understand that car insurance ” pay as you drive » offers you the same functions and types of cover as traditional all-risk car insurance. But you only pay for the kilometers you plan to travel. This is different from traditional car insurance where your premiums are not always affected by how far or how often you drive. Pay as you drive car insurance is generally designed for people who drive 14,500 kilometers or less each year.

Some providers offer specific car insurance policies to drive. However, there are other ways to save with a traditional global policy if you don’t drive very often or far. For example, 54% of car insurance providers currently offer discounts or reduced premiums to drivers with low miles to cover.

Most providers will ask you how many miles you expect to drive each year and your premium will be calculated based on this. You then give them the reading odometer of your car at the beginning of the policy.

Your insurance is often valid between your starting odometer reading and your scheduled end of odometer reading. If you need a claim and your odometer reading is lower than your starting reading or higher than your ending reading, you will have to pay an additional deductible. You can usually request one increase in kilometers drivenbut it may increase your premium.

What should be understood about car insurance per kilometer?

L’car insurance per kilometer is another type of insurance similar to “Pay as you drive” car insurance. These types of insurances charge you for the actual distance you travel on one rate per kilometerrather than being based on the number of kilometers you plan to travel.

The provider will usually send you a device that tracks this. In other words, this new comprehensive car insurance allows customers to pay a cost to cover their vehicle while it is parked and only a few cents per kilometer while they drive.

“Per-mile insurance uses driving data to measure distance and charges customers based on distance traveled,” explained Andrew Wong, founder and CEO of KOBA Insurance. In practice, each insurer thus sets a rate per kilometers for a given driver and invoices it accordingly depending on the number of kilometers which he goes through every month. »

Pay-per-mile car insurance typically charges an upfront fee that covers your car when you’re not driving, in addition to a price per kilometer every month.

Is salary per kilometer policy cheaper?

Driving-based insurance will often be cheaper than comprehensive insurance with the same insurance company. This is especially the case if you don’t use your car or rarely drive. But be aware that you may be charged an additional deductible if your mileage is outside the mileage range when you complain.

Another option is to find a car insurance provider that offers premium reduction for low mileage drivers or update your estimated mileage and see if it lowers your premiums. It may be worth obtaining a few quotes to see which solution is the cheapest in your situation.

Read also: Gray card crossed out, how long do you have to drive with it?

What are the pros and cons of pay-and-drive car insurance?

Before subscribing to a pay-for-drive policy, weigh the pros and cons.

Advantage:

  • Can potentially save you money on your premium
  • can offer one coverage equivalent to a comprehensive policy
  • Generally provides the flexibility to top up your miles as needed.

Disadvantages:

  • only suitable if you drive less than average
  • You may be charged an additional deductible if you exceed your mileage limit
  • You may have to pay more if you top up your miles
  • You can not ” set and forget just like other policies as you need to make sure you stay within your odometer range to avoid the extra excess.

Only then can you decide whether you want to take out this insurance or not.

What to remember?

The idea is that drivers pay for the number of kilometers they drive, not for the type of car they own. This new model will be used for calculate your premium instead of using a traditional system where you are billed based on the make and model of your vehicle.

Operation is simple: you pay fixed monthly fee, which includes all driving costs such as gas, insurance, maintenance and depreciation. You then purchase a device called ” On Board Unit or “OBU” which plugs into your car’s computer system to track the distance you’ve traveled.

The best thing about this new system is that it rewards drivers who drive less by charging less for their bonuses.

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