Miles of Misunderstanding: The Curious Case of 'Pay As You Drive' Insurance
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Car insurance, an industry often seen as stable and predictable, is experiencing a quiet revolution with the emergence of 'pay as you drive' (PAYD) policies. A form of usage-Based Insurance (UBI), PAYD suggests a straightforward concept: your insurance costs align directly with your actual driving distance.
But is your PAYD policy truly charging you 'as you drive'? As you’ll see, this term has evolved in its application by insurers
PAYD: a term hijacked?
A true PAYD policy, in its original sense, calculates premiums based on the actual distance driven, typically monitored through various methods like manual odometer readings, real-time tracking or even statistical models based on historical data.
But now, most ‘PAYD’ policies simply ask you to estimate your yearly driving distance, providing discounts for lower estimated mileage. This model, though not strictly PAYD in the traditional sense, offers benefits like simplicity and ease for policyholders. It also includes a self-regulating mechanism: discrepancies in reported mileage can be flagged during claims, ensuring honesty.
The current standout in true PAYD is KOBA, with its Pay-Per-Km plan, tracking via an app connected to the car’s computer. This model represents a literal take on PAYD, different from the broader industry approach.
Below are a few other PAYD policies that strike a good balance between cost, convenience, and accuracy. And scroll on further for more insightful discussion about the evolution of PAYD.
PAYD policies using the 'estimation' model
Important information on terms, conditions and sub-limits.
Budget Direct Comprehensive Car Insurance**

- Low kilometre policy for reduced premiums if driving under 12,000km a year.
- Mozo Experts Choice Value Insurance Provider of the Year - 2023^
Budget Direct's 'Drive Less, Pay Less' car insurance is ideal for drivers with lower annual mileage, offering reduced premiums for those driving under 10,000km per year. This comprehensive policy encompasses a wide range of protection, from natural disasters to theft and accidental damage, along with substantial legal liability coverage. Standout features include new-for-old car replacement for newer vehicles (T&Cs apply) and 24/7 claims support. Additionally, the policy provides a hire car following theft. Note, the excess for unlisted drivers may be higher in claims situations, your monthly premium will be higher if you choose to pay monthly rather than yearly, and certain extras like roadside assistance will cost you extra.
ROLLiN' Comprehensive Car Insurance**

- Pay for insurance month-to-month, like a subscription, with no cancellation fees
- Mozo Experts Choice Exceptional Value Car Insurance Award Winner 2023^
ROLLiN' is shaking up car insurance with a new pay-as-you-drive approach that lets you pay month-to-month without any lock-ins or cancellation fees, and may even offer reduced rates for lower mileage. So if you don't need to drive for a certain amount of time, you can simply cancel your cover without penalty and pick it back up when required. You'll enjoy 24/7 online claims support and a lifetime guarantee on authorised repairs, plus if you accidentally damage your windscreen, sunroof or window glass, ROLLiN' will fix them for free (once per insurance period). The standard excess is $800 (including under 25s) but $3,000 for any unlisted driver so make sure regular drivers are listed on the policy.
In defence of evolving terms
While we advocate for clear terminology, we recognise that language evolves. Terms like PAYD may adapt beyond their original meaning. Our goal is to keep shedding light on how these insurance models function, ensuring clarity and informed choices for consumers - starting with these tips for choosing the right PAYD policy
Tips for choosing the right 'pay as you drive' policy
Choosing the right PAYD policy is about finding one that matches your actual driving habits and offers the flexibility you need. Here are some tips to help you out:
- Understand the policy mechanism. Is the policy based on estimated annual mileage or actual kilometres driven? Your choice should align with how predictable your driving routine is.
- Look for Adaptability. Life's unpredictable, and so is driving. Opt for a policy that allows for mileage adjustments without too much fuss or added cost.
- Scrutinise the terms. Be wary of hidden fees or clauses, especially with policies based on estimates. Ensure you're clear on what happens if you exceed your predicted mileage.
- Shop around. Don't just jump at the first 'Pay As You Drive' offer. Compare different insurers to find the one that best fits your driving style and budget.
* Terms, conditions, exclusions, limits and sub-limits may apply to any of the insurance products shown on the Mozo website. These terms, conditions, exclusions, limits and sub-limits could affect the level of benefits and cover available under any of the insurance products shown on the Mozo website. Please refer to the relevant Product Disclosure Statement and the Target Market Determination on the provider's website for further information before making any decisions about an insurance product.
^See information about the Mozo Experts Choice Car Insurance Awards
Car insurance comparisons on Mozo - last updated 15 February 2025
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Comprehensive Car Insurance
Yes costs extra
Agreed or Market
$400 - $2,500
Optional Extra
Making sure your car insurance is about where you’re at right now could save you lots. Start a quote with Youi today and see what you could save.
CompareCompareComprehensive Car Insurance
Making sure your car insurance is about where you’re at right now could save you lots. Start a quote with Youi today and see what you could save.
- Monthly premiums available
- Yes costs extra
- Agreed or market value
- Agreed or Market
- Choice of excess
- $400 - $2,500
- Choice of repairer
- Optional Extra
- Discounts available
- -
- Quote time
- -
Read reviews and learn more about Youi car insurance
-
Comprehensive Car Insurance
Yes costs extra
Agreed or Market
$500 - $2,300
Optional Extra
CompareCompareComprehensive Car Insurance
- Monthly premiums available
- Yes costs extra
- Agreed or market value
- Agreed or Market
- Choice of excess
- $500 - $2,300
- Choice of repairer
- Optional Extra
- Discounts available
- Online discount $75 off new policies
- Quote time
- 6 to 8 minutes
Read reviews and learn more about QBE car insurance
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Mozo experts choice awards won:
- Exceptional Value Car Insurance - 2024
- Exceptional Value Young Driver Insurance - 2024
- Exceptional Value Senior Driver Insurance - 2024
Gold Comprehensive Car Insurance
Yes costs extra
Agreed or Market
$550 - $1,900 (varies by state)
Optional Extra
Get award winning Car Insurance. Save 15% ^ on your first year’s premium when you purchase a new policy online. Budget Direct offers tailor-made cover, new-for-old replacement, 24/7 claims, a highly-rated claims service, and get a hire car following a theft.
CompareCompareGold Comprehensive Car Insurance
Get award winning Car Insurance. Save 15% ^ on your first year’s premium when you purchase a new policy online. Budget Direct offers tailor-made cover, new-for-old replacement, 24/7 claims, a highly-rated claims service, and get a hire car following a theft.
- Monthly premiums available
- Yes costs extra
- Agreed or market value
- Agreed or Market
- Choice of excess
- $550 - $1,900 (varies by state)
- Choice of repairer
- Optional Extra
- Discounts available
- No claim discount|Online discount 15% on first years premium
- Quote time
- 2 to 3 minutes
Read reviews and learn more about Budget Direct car insurance
-
Mozo experts choice awards won:
- Exceptional Value Car Insurance - 2024
- Exceptional Value Young Driver Insurance - 2024
Comprehensive Car Insurance
Yes
Agreed
$800 flat excess fee
No
No additional excess for young drivers, lodge a claim 24/7 and zero cancellation fees. Hire car is included up to $80 per day for up to 21 days; cover for one tow to our nearest authorised repairer, following a covered incident. No excess on your first covered windscreen, sunroof, and window glass damage once per insurance period. List multiple cars and drivers under the one policy as long as they fit the underwriting criteria (excludes Safe ’n Save policies).
CompareCompareComprehensive Car Insurance
No additional excess for young drivers, lodge a claim 24/7 and zero cancellation fees. Hire car is included up to $80 per day for up to 21 days; cover for one tow to our nearest authorised repairer, following a covered incident. No excess on your first covered windscreen, sunroof, and window glass damage once per insurance period. List multiple cars and drivers under the one policy as long as they fit the underwriting criteria (excludes Safe ’n Save policies).
- Monthly premiums available
- Yes
- Agreed or market value
- Agreed
- Choice of excess
- $800 flat excess fee
- Choice of repairer
- No
- Discounts available
- Get 10% off the base premium for the first 2 consecutive monthly policies and up to a 15% potential monthly discount from your 3rd month for being a safer driver. Minimum premiums may apply. T&Cs apply.
- Quote time
- -
Read reviews and learn more about ROLLiN' car insurance
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