RAC offers innovative new Pay-by-Mile car insurance

By William Girling
Road assistance and general insurance provider RAC is pioneering a new kind of ‘pay-per-mile’ car cover for UK customers...

Billed as “a new kind of car insurance”, Pay-by-Mile has been developed in recognition that the average driver covers 20% fewer miles compared to 20 years ago.

As such, RAC is offering a flexible monthly subscription-based product for those who drive less than 6,000 miles annually (approximately 110 miles per week). 

Similar to other innovators in the space, such as Metromile, the company will charge a one-off ‘activation fee’ of £50, an affordable monthly ‘standing fee’, and then add a small per-mile cost for the distance actually covered. The service is not bound by a contract and can be cancelled at any time.

Innovative new technology

What makes RAC’s offering unique is its ‘drive tag’ - a small device that adheres to a car’s windscreen to measure mileage and calculate costs. Users connect their tag to RAC via a smartphone app. 

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The Pay-by-Mile service is available if the driver:

  • Is over 21
  • Travels less than 6,000 miles per year
  • Has been a UK resident for more than five years
  • Has an Android v.8 or iPhone IOS v.13 model (or above)

“Car insurance is a market that’s been ripe for a shake-up for some time, so we’re thrilled to introduce a truly pioneering new product which is ideally suited to drivers who don’t do that many miles,” said Mark Godfrey, Managing Director of RAC Insurance.

“So many of us are driving fewer miles now, which means we might well be frustrated at how much we’re having to pay for car insurance. With our fast and hassle-free online quote process, it’s easy for drivers to see if they could start saving money with Pay by Mile.”

Partnering on a new type of cover

All Pay-by-Mile policies will be underwritten by Highway Insurance Company Limited (part of LV=), with technical assistance provided by insurtech Wrisk.

Clive Upton, Head of Standard Private Car for LV= Broker, said, “We know customer needs are changing when it comes to car insurance, with fewer miles being driven and the need for more flexible cover that suits different lifestyles. By utilising new technology, this will provide transparent value for the exact number of miles driven.”

"We are excited about the launch of this innovative programme with the RAC and look forward to deepening our partnership with them,” added Nimesh Patel, CEO of Wrisk.

Image credit: RAC

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