‘Kilometer insurance most profitable under 15 000 km a year’
‘Kilometer insurance’ can be a better option than traditional car insurance, especially in corona times, when the number of kilometers driven is limited. According to the consumer organization, Test Aankoop/Test Achat (TA), this kind of insurance policy is profitable for anyone who doesn’t exceed 15 000 km.
Corona Direct (CD) and Yuzzu (former Touring Insurance) seem to have the most advantageous policies for those who don’t cover many kilometers. According to a survey by Corona Direct, the pioneer of ‘kilometer insurance policies’, the corona pandemic definitely changed our driving behavior. The study among more than 7 000 Belgian shows that 52% of interviewees use their cars far less often, while 34% use it as often as before the crisis.
Driving behavior changed
Numerous people adapted their driving behavior during the lockdown. Some started teleworking; others went shopping in the neighborhood (19%). Many opted for the bike (14%), some more often went on foot (13%), and others only used the car for short distances (12%).
Corona Direct discovered that most people drove fewer kilometers. “Since March 2020, we covered 15% fewer kilometers than during the same period last year.”
So, it is no surprise that many insurance companies, apart from Corona, now introduce a ‘kilometer policy’. The insurance company calculates your annual premium based on the estimated kilometers you will drive. The premium consists of a fixed base and a variable part based on the estimated kilometers you drive. Finally, you will pay for the real kilometers driven.
Test Aankoop/Test Achat says that Corona Direct is the only company in Belgium with a real kilometer policy. It’s the only company that calculates the real kilometers driven and even pays back the kilometers saved (€0,0074/km).
Other insurance companies offer a reduction in case you drive less. They use ‘kilometer scales’ of 5 000 or 10 000 kilometers. When exceeding those scales, the driver has to pay extra. However, when the driver does not meet the scale’s limit, he will not get any money back either.
“By March 2021, we will pay back about 2 million euros to clients who covered fewer kilometers than agreed on,” says CD CEO Els Blaton. It sounds tempting, especially if you consider a new car and, at the same time, you plan to telework more often.
TA compared the kilometer insurance of seven different insurance companies using a simulation. It used three car models (Renault Twingo, Ford Focus Clipper, and Mercedes CLA 180), all gasoline-powered, manual transmission, and a minimum of safety gadgets. They chose an imaginary 45-year-old driver, with a 25-year-old valid driver’s license, who was accident-free for the last five years.
According to Test Aaankoop’s calculations, Yuzzu and CD offered the most profitable formula (39% and 34,1%, respectively). Least advantageous were the policies of KBC, Belfius, and Allianz.