Per-kilometre car insurance: good or bad idea?


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For drivers who don't drive much, the arrival of mileage-based car insurance is good news. It allows you to adjust your policy according to the distance you drive each year. In Switzerland, the formula seems to be struggling to gain ground, as very few insurers offer it. In this article, we invite you to discover the relevance of car insurance by the kilometer. It could be the ideal solution if you're looking for cheap insurance.

What is mileage-based car insurance?

To find out if mileage-based car insurance policies are right for you, it's imperative to understand how they work.

Mileage-based insurance: how does it work?

Mileage-based insurance is a contract under which the insurer offers guarantees for a maximum number of kilometers per year. It is particularly suited to those who drive little.
The insurance company will consider that for a person who drives less than the average, exposure to risk on the road is less. It will therefore be possible to find cheaper car insurance based on the number of kilometers driven each year.

The two types of mileage car insurance

There are two main types of mileage car insurance, which are:
  • The mileage insurance, often accompanied by a box to check each month the number of kilometers driven by the motorist. This formula allows price and cover to be adjusted as closely as possible to the policyholder's needs.
  • The insurance with a mileage cap not to be exceeded. This formula is much more flexible, since a simple annual mileage statement may suffice for the insurer. Be aware that some insurers are satisfied with a simple declaration from the motorist.
It's important to choose carefully between these two formulas, depending on the flexibility you need.

Is it possible to insure your car by the kilometer in Switzerland?

If you've recently carried out car insurance quotes in Switzerland, you may have noticed that insurance by the kilometer is not very popular. In fact, there are only a few insurers who offer this kind of formula.
So it is indeed possible to insure by the kilometer in Switzerland. Nevertheless, finding an insurance company remains a real obstacle course.
This type of offer has managed to develop almost everywhere in Europe, particularly in neighboring countries such as Germany and France. On the other hand, according to insurers, the product is not necessarily eagerly awaited by the Swiss public.

Is insurance by the kilometer cheaper?

But then, it's legitimate to ask whether insurance by the kilometer is really cheaper for motorists.

The right solution for those who drive little

The reduction in the amount of the premium, when you insure by the kilometer, can be significant. Some companies offer a discount of up to 30%, compared with a conventional contract.

A way to get better coverage

Mileage-based insurance is not just an opportunity to lower the price of their insurance premium. For some motorists, it's also an opportunity to take out more extensive cover at a lower rate.
If you're on a tight budget and only have third-party liability cover when you don't drive much, this could be the solution for you. With the money you save, you can take out partial or even collision coverage. You'll then be better protected, for the distance you drive each year.

What happens when you drive less than expected?

What happens when the motorist drives less than contracted for really depends on the insurer. It's important to carefully read the conditions mentioned in your contract.
In general, when it comes to mileage-based insurance, the insurer provides for the possibility of carrying over the kilometers not driven to the following year. This can take the form of a sort of kitty.
Whatever happens, a first year of kilometre-based insurance can be an opportunity to readjust the contract for the following year. If you had subscribed to a limit that was too high, you can then adjust your premium for the following year.

Mileage car insurance: what happens if the limit is exceeded?

On the other hand, an unpleasant surprise may await motorists choosing mileage car insurance in the event of an overrun. To avoid this type of setback, it's imperative to gauge your contract correctly, and make sure that the formula corresponds to your needs.

The increase in the current premium

Whether it's insurance by the kilometer, or a limit set by the insurer, it's advisable to prevent the insurance company, as soon as you know you're going to exceed. This will enable the most suitable solution to be found, in an attempt to limit costs.
Most insurance contracts provide for a increase in premium for the current year, if the number of kilometers stipulated in the contract is exceeded. Your insurer may provide you with a schedule when you take out insurance. You can refer to it, to find out how much more you'll have to pay, depending on the number of kilometers driven.
This is also why when you take out a car insurance by mileage, it's always best to specify a number of kilometers higher than what you're used to driving. This allows you to anticipate unforeseen events, which could cause you to drive extra kilometers.

Loss of benefits and surcharge the following year

Mileage-based insurance entitles you to benefits, which generally translate into a lower premium. If, over the course of a year, a driver exceeds the planned number of kilometers, the insurer can simply raise the premium for the following year. If the contract came with other benefits, such as included options, it can also be terminated.
Finally, the insurer can also tell the customer that mileage car insurance is not recommended, given the overrun. The policyholder will then have to switch again to a classic car insurance contract.

The reduction in cover

Beware, the insurance contract may also provide for a reduction in coverin the event of the number of kilometers being exceeded. When formulating its offer, the insurer considers the risk of claim, based on a number of kilometers driven.
The contract may therefore stipulate that if the number of kilometers is exceeded, the risk is increased. For this reason, it is absolutely essential to be honest with your insurer about the number of kilometers actually driven. When this data is declarative, it can be tempting not to declare an overrun. Be aware that you may not be covered in the event of a claim.

Which insurers for car mileage insurance in Switzerland?

Insurers offering car mileage insurance are rare in Switzerland. For example, major groups such as Axa, Generali and Allianz do not offer this type of package. Nevertheless, we've found two companies where you can get a quote.

La Bâloise: a pioneer in Switzerland

La Bâloise was the first Swiss company to launch mileage car insurance in 2019. The latter still has an offer, with mileage ceilings not to be exceeded.

Zurich and its MyWay offer

Zurich also has an offer enabling drivers who drive little to pay less. Here, thanks to a box, motorists will be able to follow their mileage count in real time. The insurer can also adjust the contract by being responsive.

Leasing car mileage insurance

If you've ever heard of mileage insurance with other major groups, it was undoubtedly insurance aimed at leased vehicles. Indeed, when you lease a car for a long period, the contract is associated with a number of kilometers. The insurance is generally calculated on the basis of the latter.
It is then necessary to consult the conditions of the contract, to find out to what extent the motorist will be impacted in the event of exceeding the stipulated number of kilometers. In general, the insurance will be accompanied by a surcharge proportional to the number of kilometers driven in excess.
In the context of a vehicle rental, it is therefore also in your best interest to promptly notify the rental company and the insurance company, in the event of the planned number of kilometers being exceeded.

Car mileage insurance in a nutshell: when to take it out?

Summing up this article, it's advisable to take out mileage car insurance if:
  • You drive less than 10,000 km a year,
  • You want cheaper car insurance,
  • You want access to a higher level of cover without having to pay more,
  • You have several vehicles, so you can borrow another if there's a risk of overrunning,
  • You're prepared to pay an extra premium if you do overrun.
In general, the insurance company can advise you, to see if this formula is relevant to your situation.
Antoine Léger
Updated on: 30.01.2024Written by Antoine LégerHead of non-life insurance department at Comparea.
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