Miles of Misunderstanding: The Curious Case of 'Pay As You Drive' Insurance
.png)
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
Loading SVG...Comprehensive Car Insurance
- Monthly premiums
- Yes Costs Extra
- Choice of repairer
- Optional Extra
- Choice of excess
- $400 - $2,500
- Agreed or market value
- Agreed Or Market
Available discounts
Comprehensive Car Insurance
Youi like to get to know you from the very first conversation, which provides you with the opportunity to find comprehensive car insurance cover that could better suit your lifestyle and your needs. Because we’re all individuals, so we all use our cars differently from day-to-day. Youi is car insurance that’s a bit more you-shaped. Mozo People's Choice Excellent Customer Service Car Insurance award winner in 2024.
- New car if written off
- Yes - within 2 years and a listed driver is the first registered owner
- Rental car after theft
- Yes - Up to 14 days.
- Rental car after accident
- Not at fault - Yes. At fault - Optional Extra. Up to 14 days.
- Windscreen cover
- Yes - standard excess. Option to reduce windscreen excess to $50 for an additional premium.
- Modifications
- Covered only if agreed in writing.
- Young driver excess imposed
- Unlisted and aged 25 and over: $700, Unlisted and aged under 25: $2,000, Listed and aged under 25: $600
- Roadside assistance
- Yes
- Other benefits
- -
- Other restrictions
- -
- States where offered
- SA VIC TAS NSW ACT QLD WA
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.
Read reviews and learn more about Youi car insurances
Comprehensive Car Insurance
- Monthly premiums
- Yes Costs Extra
- Choice of repairer
- Optional Extra
- Choice of excess
- $500 - $2,300
- Agreed or market value
- Agreed Or Market
Available discounts
- Online Discount $75
Comprehensive Car Insurance
QBE’s Comprehensive Car Insurance covers you for things like accident damage, fire and theft. Enjoy three year new car replacement. Get a hire car if you’re not at fault. Repair guarantee. Save $75 when you apply online.
- New car if written off
- Yes - within 3 years and 60,000 km of original registration
- Rental car after theft
- Yes - Up to 14 days.
- Rental car after accident
- Not at fault - yes. At fault - Optional Extra. Up to 14 days.
- Windscreen cover
- Yes - standard excess ($0 excess for repair only). Option to reduce windscreen replacement excess to $0 for an additional premium.
- Modifications
- Automatically covered.
- Young driver excess imposed
- $700 for listed drivers under 25, $2,000 for unlisted drivers under 25.
- Roadside assistance
- No
- Other benefits
- -
- Other restrictions
- -
- States where offered
- SA VIC NT TAS NSW ACT QLD WA
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.
Read reviews and learn more about QBE car insurances
- Loading SVG...
Gold Comprehensive Car Insurance
- Monthly premiums
- Yes Costs Extra
- Choice of repairer
- Optional Extra
- Choice of excess
- $550 - $1,900 (varies By State)
- Agreed or market value
- Agreed Or Market
Available discounts
- No Claim Discount
- Online Discount 15%
Gold 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.
- New car if written off
- Yes - within 2 years or 40,000 kilometres of original registration, whichever comes first
- Rental car after theft
- Yes - Up to 14 days, max $1,000 total.
- Rental car after accident
- Not at fault - Yes. At fault - Optional Extra. Up to 14 days for at fault accidents.
- Windscreen cover
- Yes - standard excess. Option to reduce windscreen excess to $40 on every windscreen claim for an additional premium.
- Modifications
- Covered only if agreed in writing.
- Young driver excess imposed
- $600 for drivers under 21, $500 for drivers under 24, $600 for unlisted drivers, $500 for inexperienced drivers.
- Roadside assistance
- Optional Extra
- Other benefits
- -
- Other restrictions
- -
- States where offered
- SA VIC TAS NSW ACT QLD WA
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.
Read reviews and learn more about Budget Direct car insurances
- Loading SVG...
Comprehensive Car Insurance
- Monthly premiums
- Yes
- Choice of repairer
- No
- Choice of excess
- $800 Flat Excess Fee
- Agreed or market value
- Agreed
Available discounts
- 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.
Comprehensive Car Insurance
ROLLiN’ offers affordable monthly comprehensive car insurance with its favourite extras included. 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).
- New car if written off
- Yes - within 15,000km of original registration
- Rental car after theft
- Yes - Up to 21 days, max $80 per day after a covered event
- Rental car after accident
- Yes - Up to 21 days, max $80 per day after a covered event
- Windscreen cover
- Yes - one claim can be made per Insurance Period, with $0 windscreen excess
- Modifications
- Covered only if agreed in writing.
- Young driver excess imposed
- No additional excess for young drivers. $3,000 for unlisted drivers
- Roadside assistance
- No
- Other benefits
- Optional benefit to boost the Single Car Value by 15%, it will be shown on your Insurance Certificate
- Other restrictions
- -
- States where offered
- SA VIC NT TAS NSW ACT QLD WA
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.
Read reviews and learn more about ROLLiN' car insurances
