RAC Introduces New Pay-Per-Mile Car Insurance

Published Date: 18th Mar 2021

The RAC has launched a new pay-per-mile car insurance service in response to the general reduction in cars on the roads and the reduced number of miles a lot of people are covering.

The new insurance model is going to be an attractive proposition to those who have been working from home and may be doing so for a few months yet.

It’s not just COVID that has caused a reduction in vehicles on the roads, statistics show that that motorists are covering 20% less miles in their vehicles than they were 20 years ago. This is probably down to several factors including better public transport (for example Manchester launched the Metrolink tram system back in 1992). City centres are also trying to improve air quality with vehicle exclusion zones, emissions free/low emissions zones and congestion charges. There is also more of a desire and personal choice to switch to walking or cycling, presumably for health and environmental reasons.

The new RAC insurance service charges drivers a nominal cost per-mile price only for the miles they cover, called the ‘Mileage Premium’, and an additional set fee called the ‘Parked Premium’. The parked premium takes into account where your vehicle is kept overnight, the area you live in etc just like a traditional insurance policy.

This new insurance model will especially benefit those working from home who have found their weekly mileage reduced to virtually nothing.

How do the RAC know how many miles you are covering, you may ask? When you sign up for pay-per-mile insurance you will be issued with a GPS enabled device that sticks to the inside of your windscreen, the RAC call it the Drive Tag, it works alongside a smartphone app and at the end of each month the driver pays according to their mileage.

With their new groundbreaking pay-per-mile insurance the RAC say customers are not locked into a 12 month contract and can terminate the contract at any time with no notice.