Millions of motorists who drive under 7,000 miles per year could be charged extra for cover compared to those who drive over the threshold, according to ByMiles analysis. The firm says this is because many traditional providers spread prices across their customers to keep costs affordable for all.
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These vehicles may have the cheapest car insurance
ByMiles says this will mean lower mileage drivers who use their cars less end up subsidising those who clock up higher mileage.
Analysis has revealed lower average drovers pay an average of £180 more for cover than motorists who go above the threshold.
ByMiles has also revealed motorists who only travel between 5,000 and 6,000 miles could be charged up to £215 moore than those completing between 11,000 and 12,000 miles.
New MOT data from the Department for Transport has revealed the average distance driven by motorists each year is just 7,090 miles.
Analysis shows nearly 19.3million motorists could fall under 7,000 miles per year and may be overcharged on their agreement.
The car insurance firm has called on the Association of British insurers (ABI) to end the low mileage penalty.
In an open letter to the agency, ByMiles has asked for insurers to review their pricing to accurately reflect reduced risk. .
The low mileage penalty could become even more prevalent as motorists reduce their journeys due to the coronavirus pandemic.
James Blackham, co-founder of By Miles says the unfairness of the system was clear to see as he pushed for a system where motorists paid less for travelling less.
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He claimed lower mileage drivers were less likely to claim on an agreement before adding there was “no logical reason” for the higher charges.
Mr Blackham added: ““Insurers must stop inflating premiums for lower mileage drivers to subsidise the higher claims costs of higher mileage motorists and start actively rewarding people for driving less.
“The technology needed to log the actual miles completed by drivers already exists, and it’s unfair to keep overcharging low mileage drivers just because that data isn’t being properly taken into account by insurers.”
Mr Blackham also said insurance needed to evolve to work for motorists and demanded the industry should act in a more transparent way.
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He added any motorists who were concerned they may be impacted by the charge should join the firm in demanding for lower pricing.
ByMiles analysed 1.7million car insurance quotes on comparison site MoneySuperMarket as part of their research.
According to the experts, costs for those travelling over 11,000 miles each year would be just over £500 compared to almost £700 for lower mirage drivers.
Even those who only travelled between 0 and 1,000 miles per year were still charged an average of £700 per year for cover despite the minimal risk.
Dave Merrick, head of Motor at MoneySuperMarket said motorists who make fewer journeys may wish to consider securing pay as you go cover.
He said: “At MoneySuperMarket, we want to help households across the country save money on their car insurance.
“If you have a low annual mileage, you may want to consider pay-as-you-go car insurance.
“Insurers such as By Miles offer a fixed annual cost which covers your car while it’s parked, meaning you only pay for the miles you drive each month.
“The most important thing is to shop around and find the best deal for your needs. You could save up to £269.”
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