Should I get subscription-based insurance?

The traditional model of car insurance involves paying a policy annually. Even if payments are broken into monthly instalments, it’s still this annual policy that’s being paid for – usually with interest.

However, subscription-based policies are becoming increasingly popular. Here we’ll compare the models, to help you decide which type of car insurance is right for you.

Ok, talk me through traditional car insurance

Well, in the usual run of things, you tend to get a quote for your car insurance. The lump-sum price you’re quoted is known as the car insurance premium, and it’s calculated using factors such as your age, where you live, the car you drive, your driving history and so on. Anything which affects the price is known as a rating factor.

It’s important to give accurate details while applying. Because it affects the price you pay, giving incorrect information can be considered fraudulent.

If you choose to take out the policy, it’s valid for a year. This is known as the policy term. Even if you change something important like your address, the policy is updated (usually at a cost), but remains valid until the same date.

In fact, you should tell your insurer of any changes to the details you provided when you applied. This could be a change of job, for example. This might alter the price of your premium, and may well incur an amendment fee.

At the end of the year, you’ll be able to renew your car insurance with your current provider, or switch to a new provider.

As mentioned, it’s possible to pay for car insurance monthly, but you’re still paying off an annual policy. And you’ll probably be charged interest, as making a monthly payment is effectively paying off a loan for the full year’s cost.

There’s obviously a lot more to it, but that’s how annual car insurance works, in a nutshell.

What is subscription-based car insurance?

If you take out a rolling subscription policy, these tend to be more flexible. You’re likely to make a monthly payment, and it’s easier to modify your cover, and add certain options on demand. It’s essentially ‘pay as you go’ cover.

This model also allows for dynamic pricing. In the case of Driverly and other telematics policies, you might gradually shave money off your payments by proving you’re a safe driver.

What are the advantages of subscription-based policies?

You can make regular changes

Life changes all the time, and so do our needs. When it comes to insurance, you might need to add and remove additional drivers as required. A rolling policy means you can do this with less faff than you would with an annual policy, and won’t get stung with amendment fees.

You should see your prices come down quicker

If you’re paying monthly and acing your driving scores, you should see the cost of your car insurance come down... Over months, rather than years! This means you can reap the benefits of any reduction in your price sooner :)

We don’t charge fees

Yes, you read that right. With normal annual car insurance policies, there may be several fees and charges to pay. However, our rolling policy is completely fee-free. We can’t say that for all subscription-based insurance, but it’s certainly true of Driverly car insurance. You’re welcome :)

What are the disadvantages of subscription-based policies?

Er… Quite honestly, we don’t think there are any cons.

From an insurer’s point of view, it’s a new model, so it can be tricky to implement. But enough looking behind the curtain. From a consumer’s point of view, we can only see advantages. It’s the evolution of insurance.