The “no-ties” cover has been launched in the wake of data showing miles driven are 20 per cent lower than 20 years ago and a prediction that motorists’ mileages could fall even further in a post-Covid world where more people work from home.
Charging drivers from 4p per mile, the RAC says the policy is aimed at saving money for drivers who cover fewer than 6,000 miles a year, and is suitable for those whose mileage varies significantly from month to month.
The new fully comprehensive policy charges users a monthly "parked" price to cover the car when it’s not in use, then uses a windscreen-mounted drive tag to monitor the car’s mileage, charging an agreed per-mile price for the miles driven.
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The RAC says the policy is completely flexible, charging no fees after an initial £50 activation fee and allowing drivers to cancel at any time without penalty.
Mark Godfrey, managing director of RAC Insurance, said: “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.
“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.
“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.
“The impact of the coronavirus pandemic on driving patterns means it feels like this product has never been more relevant. 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.”