RAC launches new car insurance agreement offering cover for just 4p per mile

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The new flexible agreement will be available for those who travel less than 6,000 miles per year, providing fully comprehensive cover while the vehicle is being driven and parked. Drivers will not be locked into a 12-month contract and there will be no fees for changing vehicles or for updating any details.

Road users will need to simply stick the RAC “drive tag” to their windscreen, which detects when their car is in use.

This will then transmit the distance travelled to the pay by mile smartphone app with drivers then just paying the miles they have driven.

To get started, drivers will simply need to pay a one-off £50 fee and a small charge to cover the car when it is parked.

Managing director of RAC Insurance Mark Godfrey said the new agreement “offers something different” for drivers.

He said: “With a standard car insurance policy, drivers are expected to estimate how many miles they expect to drive from the outset, whether or not they cover this distance during the policy year or not.

“For people who don’t drive very regularly or only ever go short distances, this could result in a premium that seems overly expensive.

“Pay by Mile from RAC Car Insurance offers something different.

“After paying a one-off £50 activation fee and a small set monthly sum that covers the vehicle for all the time it’s parked, drivers just pay a clear ‘per mile’ price of as a little as 4p for every mile they actually drive.

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“This way, motorists save money for whenever they don’t, or can’t, drive.”

The RAC said customers can track their overall mileage and charges 24 hours a day, seven days a week via their online account.

The RAC confirms drivers will have no tricky devices to plug-in and no other details or information will be tracked except for mileage.

The agreements will also be underwritten by the Highway Insurance Company, a part of LV=.

Mr Godfrey added: “With monthly, no-ties subscriptions now the norm for so many services we felt the time was right to bring this approach to car insurance – so our new product offers both flexibility and transparency.

“Pay by Mile customers can easily calculate how much their insurance is costing them from one month to the next.

“They’re not locked into a 12-month contract that can cost them if their car use suddenly changes.

“And, if at any point they find a better deal elsewhere, they’re free to leave giving no notice.”

Clive Upton, Head of Standard Private Car for LV said partnering with RAC was a “great opportunity”.

He said: “Our partnership with the RAC Pay by miles is a great opportunity to bring a brand-new product into the market that offers customers a tailored monthly subscription, and we’re excited to be part of it.

“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.”

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