Low-mileage drivers save 10% less as usage-based insurance grows

A recent report from Go Compare has brought attention to the relationship between mileage and insurance premiums, prompting further examination of usage-based insurance solutions in the UK.

The findings show that motorists who drive up to 6,000 miles per year pay, on average, GBP £444 in insurance premiums. This is nearly 10% less than those who cover greater distances annually. The figures suggest a clear correlation between mileage and premium costs, highlighting the potential for usage-based insurance (UBI) and Pay-As-You-Drive (PAYD) models to provide financial benefits for drivers who travel fewer miles or adopt more careful driving habits.

The report also highlights regional differences in premium prices. London drivers face the highest average annual premiums at GBP £598, which is 74% higher than the median cost of GBP £343 for drivers in Wales. The data further notes that comprehensive insurance policies, regarded as offering the most complete level of cover, are only GBP £10 higher than third-party fire and theft policies.

Telematics solutions

With these trends in the spotlight, connected data firm Trakm8 is advocating for a wider adoption of telematics-powered models that gather and use real-time driving data. Such solutions enable insurers to tailor premiums with greater accuracy based on individual mileage and driving behaviour.

Adam Gooch, Managing Director of Insurance at Trakm8, said:

This data clearly illustrates how usage-based insurance can help drivers save money, particularly as the cost of living continues to rise. At Trakm8, our advanced connected solutions enable insurers to offer fairer, more personalised policies that reward drivers for lower mileage and safer driving habits. By harnessing connected data and AI-powered insights, insurers can reduce risk and support a greener, more sustainable future.

Market trends

Average car insurance premiums in the UK are at their lowest since early 2023, the Go Compare research reveals. This environment may encourage more insurers to consider UBI and PAYD offerings, which rely on smart technology and driver data for pricing decisions. These models also support greater personalisation and flexibility for policyholders.

Trakm8 reports that its integrated, AI-powered platform and mobile app are designed to help insurers turn real-time driving data into actionable insights. Such tools could further the aim of more tailored pricing and support wider industry and governmental ambitions to reduce traffic emissions and promote responsible vehicle use.

Currently, the ongoing focus on reducing household expenses, particularly during periods of higher overall living costs, is likely to sustain interest in insurance options that reward lower mileage and safer driving. The data presented by Go Compare and the applications highlighted by Trakm8 outline how the insurance sector is responding to these conditions by promoting telematics-based models as a means of delivering both consumer and environmental benefits.