Some fleet operators are now looking at pay-per-mile cover as a way to manage costs. The idea is simple: instead of paying a fixed annual premium, the amount is based partly on the distance the vehicles travel. For fleets with unpredictable workloads or long periods of inactivity, it may sound appealing. But whether it truly works in practice depends on the fleet’s usage patterns, the type of work carried out, and how the policy fits with wider risk management.
Pay-per-mile cover is often marketed as a fairer system for low-mileage vehicles. A car that sits unused for much of the year presents a different risk to one that’s constantly on the road. Charging per mile could mean lower premiums for operators whose vehicles spend more time parked. However, fleets with high utilisation may see little or no saving compared to a traditional policy.
Standard fleet insurance has the advantage of simplicity. It allows multiple vehicles of different types to be insured under one policy, with flexibility in levels of cover. This can include third-party, third-party fire and theft, or comprehensive protection, for different vehicles, all within the same agreement. Fleet cover can sometimesoffer options for public liability, and extras like breakdown, employer’s liabilityor legal assistance. For operators who value stable costs and wide protection, this structure can be more predictable than usage-based pricing.
One challenge with pay-per-mile is that costs can still climb quickly if vehicle usage rises unexpectedly. Seasonal contracts, emergency jobs, or changes in client demand could push mileage above the forecast. This makes budgeting harder, particularly for businesses that cannot fully control their schedules. In such cases, the certainty of a fixed premium may outweigh the potential savings.
Another factor is administration. Pay-per-mile systems often require telematics or GPS tracking to log distances accurately. While telematics is already used in many fleets for safety and planning, operators need to be sure the data is reliable and the reporting process works smoothly. Any disputes over recorded mileage could delay claims or affect premium calculations.
Risk management remains essential, whichever policy type is chosen. With a traditional fleet insurance policy, safe driving records, strong maintenance routines, and effective route planning can still help reduce costs at renewal. For pay-per-mile cover, the same habits matter but the focus shifts to limiting unnecessary journeys and avoiding situations that might lead to higher mileage.
There is also the question of cover quality. A usage-based premium model should still provide the same level of protection for accidents, theft, or damage. Cutting mileage-based costs is not worthwhile if the policy has exclusions that leave key risks uncovered. Fleet owners should compare not just the price, but also the scope of what is included.
For some, a blended approach could work. Core vehicles that operate daily might stay on a standard fleet policy, while rarely used vehicles take a usage-based option. This mix can give cost control without sacrificing essential protection. It does, however, require careful policy management and regular reviews to ensure each vehicle is on the most suitable arrangement.
Ultimately, the value of pay-per-mile cover depends on the fleet’s specific profile. Operators with steady, predictable mileage might prefer the stability of conventional terms. Those with large seasonal swings or vehicles kept in reserve may benefit from a usage-based model, provided they track mileage closely and understand the terms fully.
Whatever the choice, keeping protection aligned with the fleet’s real-world use is key. A well-structured fleet insurance policy can adapt over time, adding or removing vehicles, adjusting cover levels, and responding to changes in driver needs. Pay-per-mile may be one tool in that mix, but it should be weighed against the flexibility and proven stability of more traditional fleet cover.
