As the roads in many developed countries get increasingly congested, it's hardly surprising a lot of people are driving less on average than they were only a few years ago. However, the cost of motoring when we take into consideration fuel, taxes, tolls, parking and congestion charges and insurance continues to rise. To combat at least one of these rising costs, and to be fair to those who are driving less but who still need to have a car available to them, a company in the UK has launched an innovative 'pay-as-you-go' insurance product that might just be the start of something.
By Miles is an insurance company asking drivers to pay a flat-rate annual motor insurance fee that covers the car when it's not in use. After that, the driver pays an additional amount for every mile they drive. The product is designed particularly for those who drive fewer than 7,000 miles per year, or an average of 140 miles per week. The upfront flat-fee insures the vehicle against theft or damage when parked and not in use, and after that the customer is charged purely for the amount they actually use their vehicle. In essence, it allows those who need to have a car available for short journeys or infrequent use to avoid paying over the odds for their insurance.
On the face of things, it seems perfectly reasonable and a pretty good and innovative idea. However, there are elements of the scheme that may start to ring alarm bells with some people, and might lead them to think the cons outweigh the pros of slightly cheaper insurance premiums. And that's because to monitor the mileage the car is doing means having a telematics device plugged into the vehicle's On-Board Dynamics (OBD-II) port. Journey mileages and charges can be monitored with a dedicated smartphone app, and the user will be billed each month based on the distance they cover.
Although By Miles is at pains to assure us drivers will not be charged in any way based on how or how fast they drive, that data is also inevitably going to be recorded by the system. By Miles insists they will "never share any of your personal driving data with the police, unless we are obliged to as a direct result of a court order." It doesn't mention the data being used for other purposes.
If a user is ok with that, then here's what it will cost. The minimum flat-rate, regardless of whether the vehicle is driven or not, will be £150 (about $195/€168) per year, and each mile driven adds an additional charge of 3p (about $0.04/€0.034). That's just the start though. For a 25-year old living in London the flat charge rises to £315 per year (about $410/€353), and the mileage charge is a whopping 8.5p (about $0.11/€0.10).
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