More than 19 million UK drivers are falling foul of a low mileage penalty, according to new research from pay-as-you-drive insurtech By Miles.
By Miles analysed more than 1.7 million customer quotes from comparison site MoneySuperMarket and found out that low mileage drivers will pay £180 more for their policies than those driving more than the UK average of 7,000 miles.
An estimated 19.3 million cars in the UK are driven under the national average of 7,090 miles per year, with the majority of drivers getting quotes for driving between 5,000 and 6,000 miles in a 12-month period.
By Miles found that drivers declaring 11,000 to 12,000 miles per year are 1.5 times more likely to have made a claim in the past five years, and that drivers aged 40 to 49 who drive 5,000 to 6,000 miles pay up to £150 more than drivers of the same age doing 11,000 to 12,000 miles.
The insurtech called on the Association of British Insurers (ABI) to take action and “end this low mileage penalty”.
In an open letter to the ABI, By Miles chief executive officer James Blackham wrote: “We believe this problem is solved by more flexible pricing models, such as pay-by-mile policies, that accurately take mileage into account in real time. We recognise that it’s not possible for all insurance companies to shift to this model quickly. But something must be done to protect lower mileage drivers from being overcharged in the meantime.”
Blackham urged ABI insurer members to review their pricing to better reflect the reduced risk posed by decreased mileage, stop using the premiums of lower mileage drivers to subsidise the cost of insurance for higher mileage drivers, and be more transparent about how they are using mileage to price insurance, so drivers can understand how their information is being used in quotes.
He added: “It is now clearer than ever that there’s an undeniable link between high mileage and claims frequency, so we urge the ABI to ensure that the savings made by insurers are passed onto lower mileage motorists. When you drive less, you should pay less for your car insurance. It’s as simple as that.”