Insurance provider to launch new pay-as-you-go car insurance cover for occasional drivers
A smart new policy for car owners who don’t drive so often has been launched by an insurance provider here in the UK.
The new pay-as-you-go car insurance policy will allow motorists who own a car but only drive occasionally to take out cover on an hourly basis.
The idea is the first in the UK and will require the owner of the car to take out a monthly subscription with the insurers of between £10 and £30, and then for every hour the vehicle is on the road, the owner will have to pay around £1.20 for each hour of running time.
The new policy has been introduced to the UK insurance market by Cuvva, who already provide by-the-hour insurance cover for those wishing to drive a car belonging to a family member or friend.
The insurance providers, who are based in Edinburgh, said that the new cover has mainly been designed for “young city dwellers who pay high insurance premiums for cars that are driven for fewer than 4,000 miles a year.”
Figures released by the DfT and DVLA estimate that there are around six million cars across the UK which could be described as being driven “now and then.”
Motorists only driving occasionally are being made to pay substantial premium charges despite the fact that they’re rarely on the road and are, in effect, picking up the tab for higher mileage drivers.
To help low-mileage drivers keep costs down, the new policy from Cuvva offers drivers the opportunity to take out a monthly subscription from between £10 to £30, dependent on where the driver lives and what car he/she drives – this fully-comprehensive monthly subscription ensures that the vehicle is insured whilst parked up and not in use.
As and when the owner wishes to drive their car, they must then pay from £1.20 for each hour they’re out on the road, by simply using a top-up service via a Cuvva app.
However, the new product doesn’t work like the insurance provider’s current by-the-hour service, which allows a driver to get behind the wheel of any car.
The new monthly subscription cover insures the driver for one vehicle only, so if the vehicle is shared by two people, they would both need to take out a subscription to be able to drive it.
Drivers taking out the monthly subscription will still be able to build up their no claims discount and the service can be cancelled at any point, with no costs involved.
The average insurance premium had risen to £767 by the end of 2016 but was much higher for new young drivers – an average policy for a 17-year-old worked out to around £2,122 a year.
According to Cuvva, their new monthly pay-as-you-go subscription service could help save low-mileage drivers around 70% on their annual premium, somewhere between £500 and £1,500 per year.
Freddy Macnamara, the founder of Cuvva, said he came up with the pay-as-you-go cover idea over discussions with a friend about lending his car to them.
“It was ridiculous that I couldn’t borrow a car for an hour, because of the difficulty of getting short-term cover,” said Mr Macnamara.
General Partner at venture capital investor LocalGlobe Ophelia Brown said: “Pay-as-you-go insurance is a long overdue product in the UK, where increasingly the trend is for drivers to use their cars less and less.”
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