Car insurance to suit every driver

Usage-based insur­ance (UBI) is quite the thing these days. As telem­at­ics tech­nol­o­gy has become smarter and peo­ple have demand­ed more per­son­al­i­sa­tion from the insur­ance indus­try, insur­ers recog­nise they could win more busi­ness by tai­lor­ing their offer­ing. Car poli­cies aimed at dif­fer­ent types of dri­ver are the most devel­oped form of UBI, but oth­er sec­tors are show­ing inter­est, espe­cial­ly now coro­n­avirus means we are using our cars less. Here, we explore five UBI options for car own­ers of all stripes.

1. The low miler

Research from By Miles shows the more some­one dri­ves, the more like­ly they are to make an insur­ance claim. Yet the insur­ance pre­mi­um for low-mileage dri­vers is like­ly to be high­er than for those who dri­ve fur­ther. The com­pa­ny says motorists who dri­ve under the UK aver­age of 7,000 miles annu­al­ly are pay­ing £180 a year more than those dri­ving more.

By Miles users install a match­box-sized track­ing device under the bon­net or con­nect an app direct­ly to the milome­ter in new­er cars. The insur­ance pre­mi­um is then made up of a fixed annu­al fee that cov­ers the car when it’s not being dri­ven, plus a rate of a few pence per mile.

For exam­ple, one new By Miles cus­tomer dri­ves 2,500 miles a year in cen­tral Lon­don. She says: “When I went to renew [with my old insur­er], I was quot­ed over £400, which seemed real­ly high to me, par­tic­u­lar­ly as I dri­ve so lit­tle. My quote with By Miles was £269. Pay-by-mile car insur­ance just feels fair and it’s worked out real­ly well for me dur­ing lock­down; my month­ly state­ment for March was only £1.59.”

2. The safe driver

While many insur­ance com­pa­nies have sprung up offer­ing pay-as-you-go, mileage-based poli­cies, some have gone fur­ther by offer­ing pay-how-you-go poli­cies.

One such insur­er is UBI com­pa­ny Insurethe­box. It relies on telem­at­ics tech­nol­o­gy installed in the vehi­cle which mon­i­tors dri­ving habits: the time of day, the type of road and how the car is being dri­ven, for exam­ple how the accel­er­a­tor and brakes are used.

Dri­vers pay for a com­pre­hen­sive pol­i­cy cov­er­ing 6,000, 8,000 or 10,000 miles, but can reduce their insur­ance pre­mi­um through good behav­iour. Users can see their dri­ving data on a cus­tomer por­tal and, after an ini­tial infor­ma­tion-gath­er­ing peri­od, they can earn up to 100 free miles a month, just by dri­ving safe­ly. If you reg­u­lar­ly dri­ve too fast for the road you are on, this can trans­late into a high­er insur­ance pre­mi­um.

The com­pa­ny says cus­tomers save an aver­age 28 per cent on their pol­i­cy after the first year of no-claims dri­ving, increas­ing to 36 per cent in year two.

3. The fleet driver

Con­cir­rus, a data provider to the insur­ance indus­try, has launched Quest Auto­mo­tive Fleet, a plat­form that uses data from installed telem­at­ics tech­nol­o­gy to man­age indi­vid­ual dri­ver risk and detect col­li­sions in real time for fleet man­agers.

The plat­form enables insur­ers to devel­op UBI pro­grammes for man­agers of cor­po­rate car fleets. It is already being used by insur­ance com­pa­nies Acorn and Anti­lo.

It can pro­vide fleet man­agers with noti­fi­ca­tions of risky dri­ving habits, such as exceed­ing the speed lim­it by a spec­i­fied amount and excess mileage includ­ing whether the car is being dri­ven exces­sive­ly at night when the risk of an acci­dent is high­er. Man­agers can also spec­i­fy the areas of oper­a­tion for a vehi­cle and restrict oth­er areas. They are then able to take proac­tive action and active­ly man­age dri­vers’ behav­iour.

It can also inform fleet man­agers in real time if an acci­dent has occurred. The com­pa­ny says that ear­li­er iden­ti­fi­ca­tion of acci­dents can lead to cost-sav­ings of £3,000.

In addi­tion, the plat­form can help iden­ti­fy the best dri­vers so fleet man­agers can use this knowl­edge to rein­force and encour­age pos­i­tive behav­iour.

4. The delivery driver

If one thing has emerged dur­ing lock­down, it is the invalu­able role played by deliv­ery dri­vers. With many of them on zero-hours con­tracts, the idea that they would pay an annu­al insur­ance pre­mi­um to pro­tect them­selves while work­ing for the likes of Deliv­eroo or Uber Eats makes lit­tle sense.

Eston­ian-found­ed and Lon­don-based Zego was set up in 2016 by two for­mer Deliv­eroo direc­tors Sten Saar and Har­ry Franks, with tech­ni­cal co-founder Stu­art Kel­ly, to pro­vide flex­i­ble UBI for the gig econ­o­my. The company’s first pol­i­cy sold for just £2.30. Four years on, users can buy a range of flex­i­ble poli­cies via app, web and phone.

The com­pa­ny offers insur­ance poli­cies from as lit­tle as an hour’s cov­er for cars, vans and scoot­ers, and will soon launch poli­cies for elec­tric kick scoot­ers. Van dri­vers insured through Zego can track their jour­neys auto­mat­i­cal­ly through the app which helps build a per­son­al score based on dri­ver habits. The app offers tips on being a safer dri­ver and also shows where the dri­ver ranks on a leader­board.