The pricing is based on how you drive as opposed to how far you drive. They are targeting people who struggle to find car insurance otherwise, and younger drivers.
A few comments after having only spent a few minutes on the site:
- The car insurance product incentivizes safe driving behaviour, which is good.
- The driving is scored using a points based system.
- You can lose your car insurance policy, much like losing your license on the Australian demerit point system if you get to 12 points. Not sure how that works legally, but the contract probably has safe driving as an underwriting condition.
- Points drop off after time, again similar to the Australian driving license demerit point system.
- You buy miles in mileage bands, by agreeing to maximum mileage. That means you declare up front how much you’re going to drive, and then get penalty points if you do more than that. I assume you pay more for higher mileage bands. The mileage bands available are 3,000, 5,000, 7,500, 10,000 and 13,000 miles.
- You get penalty points for fast driving, going over your stated mileage band, and driving too much at night (more than 10% of your mileage band).
- Quite amusingly, if you get to 12+ points you have 7 days to “appeal” against your policy being taken away. Would love to see how that fits into the British arbitration system!
What is good about the product:
- It links insurance cost to driving behaviour, which should improve how people drive.
- People can get feedback on the site on their historical behaviour.
What can be better:
- The product is still quite complicated. I am not sure how it can be made simpler, but it is not all that easy to understand.
- The penalty points are for a small set of behaviours only.
- It is not explicitly linked to mileage driven, but rather implicitly through the bands.
- The telemetry device needs to be installed, and collects location data.
All in all, it is good to see another Pay As You Drive product go live, and we wish them well!
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