‘Estimated mileage can be wrong’ – most drivers want ‘pay-as-you-go’ option for their motor insurance

The over-55s are most likely to want to use pay-as-you-go insurance cover because they often drive less than young people.

A survey of 1,000 adults nationwide, commissioned by Peopl Insurance, revealed strong interest in the concept of pay-as-you-go (PAYG) insurance cover – which is available in countries such as the UK and US. It typically works out cheaper for low-mileage drivers.

Six in ten people would be in favour of a pay-as-you-go approach to motor insurance in Ireland.

When asked whether they would like a pay-by-distance or pay-per-hour option, one in three adults said they would definitely consider using this method of insurance. One in four said they could see the benefits of it, even if they would not use it themselves.

Paul Walsh, a spokesperson for Peopl Insurance, said: “With the standard car insurance model available in Ireland, drivers estimate the number of miles they will drive a year when taking out or renewing their policy, and this estimated mileage is one of the things factored into the cost of their car insurance.

“However, these estimates can be wrong or too high, meaning that people may inadvertently and unnecessarily be paying too much for their car insurance as they’re essentially paying for miles they don’t drive.”

Mr Walsh said it was not surprising that the survey found strong support for the concept of PAYG motor insurance among the over-55s.

This is because as people get older and retire, they often do less mileage in their cars so they might feel it is unfair that they have to pay the same for motor insurance as those who could be on the road seven days a week. He said it was not just the older age cohort that might benefit from a pay-as-you-go insurance system.

Mr Walsh said the average distance driven in a privately owned petrol car in Ireland is around 10,000 miles according to figures from the Competition and Consumer Protection Commission.

However, he said many people were doing far less driving.

With PAYG insurance, a small tracking device is typically installed in a car to record the number of miles or hours that a driver has driven and this is then factored into a monthly premium calculation. On top of this, drivers are typically charged a fixed fee to cover their car for theft or damage while it’s parked.​

In the absence of a PAYG option in Ireland, Peopl is urging drivers to review the mileage on their policies.

The Peopl Insurance spokesman said car insurers still placed a high value on insuring motorists with low mileage.