Usage-based car insurance prices you on how you actually use your car, rather than on an average built from your age and postcode. In the UK it comes in two forms, and they suit opposite kinds of driver.
One prices you by the mile. The other prices you by the way you drive. Choosing the wrong one can cost you money, so it helps to know which is which before you compare quotes.
The two kinds of usage-based car insurance
Both models measure something and price you on it. What they measure is completely different, and that difference decides who each one is good for.
Pay-per-mile | Pay-how-you-drive | |
|---|---|---|
What sets your price | How many miles you drive | How you drive those miles |
What gets measured | Distance, using a tracker, tag or app | Speed, braking, acceleration, cornering and the time of day you drive |
Typical shape | A fixed cost while the car is parked, plus a rate for every mile | An annual policy, with your driver rating feeding your price at renewal |
Best for | Drivers covering very low annual mileage | Careful drivers, at any mileage |
Works against you if | You cover high mileage | Nothing to do with mileage, though your rating follows your habits |
Which one suits your driving
Start with your mileage, then look at how you drive.
- You drive very little. If your car mostly sits outside the house, pay-per-mile is worth a look. You pay to keep it covered, then pay for the miles you actually do.
- You drive a lot, but carefully. Pay-how-you-drive is built for you. Mileage isn't the thing being priced, so distance doesn't count against you.
- You get priced badly on age or postcode. Behaviour-based pricing gives an insurer something better to go on than an average.
- You have a second car you rarely use. Per-mile cover often stacks up on the car that barely moves.
One thing worth clearing up. You will often read that usage-based insurance is poor value if you drive a lot. That is true of pay-per-mile, where every extra mile adds to the bill. It is the reverse for pay-how-you-drive. Mileage is not what sets the price, so someone covering 20,000 careful miles a year is exactly who that model is designed for.
How pay-how-you-drive pricing works
Your phone does the measuring. The Zego app uses your phone's sensors to record how each journey goes, and builds that into a driver rating.
The rating reflects the habits that genuinely affect risk:
- Speed, against the limit on the road you are on
- How smoothly you brake and accelerate
- How you take corners
- When you drive, including late nights
Drive well and your rating reflects it, which feeds into a personalised price when you come to renew. Nothing gets fitted to your car.
What usage-based cover does not mean
- It does not mean a black box. App-based telematics uses the phone you already carry. Nothing gets wired into your car.
- It is not the same as temporary cover. Short-term policies sold by the hour or the day are a different product, whatever they are priced on.
- It is not pay-per-mile at Zego. We do not offer pay-per-mile or pay-as-you-go cover for personal cars. If per-mile pricing is what you want, you will need a provider that specialises in it.
Zego's telematics car insurance
Zego telematics is app-based car insurance where your driving affects what you pay. You get a driver rating from the way you drive, and a better rating works in your favour at renewal. There is no box to fit and no engineer to book.
You can read more about how it works on our telematics car insurance page.
Frequently asked questions
Is usage-based car insurance cheaper?
It depends which kind, and on you. Pay-per-mile can work out cheaper for genuinely low mileage. Pay-how-you-drive rewards good driving rather than low mileage, so careful drivers tend to do better on it.
Do I need a black box fitted?
Not with app-based telematics. Your phone does the measuring, so nothing gets installed in the car.
Is usage-based insurance only for low-mileage drivers?
No. That applies to pay-per-mile only. Pay-how-you-drive prices your driving, not your distance.
Is pay-per-mile the same as pay-how-you-drive?
No. Pay-per-mile prices the miles. Pay-how-you-drive prices the driving. They suit different people and they are sold as different products.
What does the app measure?
Speed, braking, acceleration, cornering and when you drive. It builds those into your driver rating.
If you drive carefully and you are tired of paying for someone else's averages, get a telematics quote and see what your driving is worth.
Last Reviewed: 20.08.2026