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Why we're relaxing cancellation fees on new policies this month.

James Blackham's profile picture
James Blackham

With drivers sensibly taking the Government’s advice and staying at home during the coronavirus pandemic, they could unknowingly be overpaying for car insurance. We’ve decided to do something about it.

While fewer miles being driven on the road at the moment is good for preventing the spread of the virus, it also means that car insurance companies are benefitting from having to pay out for fewer claims.

If a car isn’t being driven, it’s far less likely to be involved in an incident on the road (though you obviously want to be covered in case of theft, accidental damage or vandalism while you’re parked up). It’s not fair to keep charging people as if life is going on as normal, because let’s be honest, it’s not.

This is where pay-by-mile car insurance policies really come into their own - if you stop driving, then you stop paying altogether.

That’s why we’re giving drivers that buy in April the chance to try a pay-by-mile policy for three months, with no obligation to stay (full terms at the bottom of this post).

We want to support people if they want to cancel their existing policy, and switch to pay-per-mile during the crisis. If they find themselves returning to a higher mileage when things get back to normal, we’re taking a relaxed approach. We’ll waive our usual cancellation fee and refund them for any days or months they haven’t used as of the cancellation date. We thought it would be fairer that way.

What are other car insurance providers doing about coronavirus?

At the moment, much like everyone else, insurers are trying to adapt to changes in everyday working life. Understandably, they’re prioritising support for claims (as they’re the most urgent) over administrative changes on policies.

They’re also asking customers to call only if it’s absolutely necessary, as the waiting times are much longer than usual right now. That means people looking to update their annual mileage estimate, or to check how the current situation may affect their premium, can face a bit of a battle getting in touch.

In a bid to ensure the industry adapts quickly to customers’ needs, the Association of British Insurers (ABI) has called on its members to offer extra support to those affected by Covid-19. All ABI members (most of the insurers you’ve heard of, including yours truly) have pledged to support:

  • People making a claim
  • People working from home
  • People that can’t work from home
  • People using their car to help communities
  • Key workers

Naturally, mileage should play a key role in all of this, whether increased or decreased - but this doesn’t seem to get a mention.

Are insurers taking reduced mileage into account for policyholders?

The problem is that traditional car insurance is outdated and doesn't fairly reflect changes in driving habits. This is particularly true today as it fails to take into account the very different lifestyle that drivers are experiencing right now.

All insurers take mileage into account, but lower mileage drivers haven’t been treated particularly fairly in the past. We did some research with MoneySuperMarket last year that suggested that traditional car insurance providers were actually charging lower mileage drivers up to £233 more for their car insurance, compared with people driving a higher mileage.

Since they’ve no way to measure your mileage, most traditional insurers are wary of people boasting a very low yearly mileage estimate, and seem to ignore it.

We’re doing it a little differently

Now that most drivers will be clocking up significantly lower mileage than before , it’s only fair that their car insurance policy reflects that. Here at By Miles, we’ve been rewarding drivers for doing this since we launched in 2018.

In light of the lockdown that’s affecting people all over the country, we're offering people that normally drive a lot the chance to take advantage of our service to see if it could benefit them.

It couldn’t be simpler - our members pay a lower fixed cost up front, then only pay a few pence for each mile they drive. The less you drive, the less you pay.

We've built an award-winning product that's loved by over 10,000 lower mileage drivers in the UK, offering them a fairer, more flexible way to pay for car insurance. Given the current circumstances, there's a high chance that people that normally drive a lot have been forced to become lower mileage drivers for a limited time, and they're probably overpaying for their car insurance as a result.

We're hoping we can help people save money - especially those on pay monthly policies with huge APR interest rates.

If your traditional policy is causing you a headache, why not use this as an opportunity to give pay-by-mile a go? If your current insurer won't suspend your payments, or tries to charge you a cancellation fee to leave, then due to your dramatic change in circumstances, we'd suggest this is against the principles of fairness outlined by the ABI, so don’t let them do it.

Sounds good, but what if I go back to doing my usual mileage after the lockdown?

Once the social isolation restrictions are lifted, if drivers find they're driving more and a pay-by-mile policy is no longer cost effective for them, they can cancel without a fee, provided they've been with us for a minimum of three months - we'll also refund the days or months from their fixed upfront cost that they haven't used.

The world is an uncertain place at the moment, so we’re trying to help in any small way that we can. If that means providing a short-lived lower mileage car insurance policy that could help people trying to keep their spending at a minimum right now, we’re more than happy to offer a hand.

Get a quick quote for a pay-by-mile policy by clicking here, and see if you could make a saving in under a minute.

Relaxed Cancellation Fees Offer.

The not-so-small print: For all policies purchased between 00:01, 1 April 2020 and 23:59, 30 April 2020, provided the policyholder has been on policy for a minimum of 90 days and states a change of circumstance due to driving more, the usual cancellation fee outlined on any policy documents at the time of cancellation will be waived to £0.00, and any days or months of the annual policy that haven’t been used will be refunded on a pro-rata basis, subject to the terms outlined in our policy handbook. Read our standard terms at bymiles.co.uk/terms-of-business.

By Miles Ltd is authorised and regulated by the Financial Conduct Authority (FCA) number 773046.

At the moment, policies are available for drivers aged between 25-78.

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