Prepaid car insurance is often too expensive

The insurer Nationale Nederlanden recently launched prepaid car insurance. The idea sounds interesting but by far most car owners can't do anything with it. You pay the premium for the car insurance per thousand kilometers, but from a few thousand kilometers per year, the prepaid car insurance can often be out of the question.

Just owning a car is something you pay heavily for. You pay premiums for insurance, but also taxes, maintenance costs and annual depreciation, for example. You can influence these costs, especially insurance expenses. If you drive your car very little, the costs are still high. One solution seems to be prepaid insurance, but is it really a savings or do you pay more per year under the line?

Bundelz from Nationale Nederlanden

For prepaid car insurance, simplicity is the key word. No difficult calculations, but a fixed rate for everyone. For the WA car insurance you pay €50 per 1,000 kilometers driven. For the WA cascade the rate is €70 per 1,000 kilometers driven. Strict requirements do apply. You must be at least 30 years old and have at least 8 claim-free years. The new value of your car must not exceed €30,000. It is still only a pilot. The insurer is still investigating whether this prepaid insurance really adds something.

How does the insurer know how many miles I drive?

Insurer Bundelz uses a plug you plug into the car's ODB port to record the number of miles driven. This way, the insurer knows how many miles you drive. They can also record your driving habits and when you drive where. So it is quite privacy sensitive. The insurer does nothing else with the data. You just have to trust that.

Isn't prepaid car insurance far too expensive?

For a few, it may matter, but most drivers are better off saving money by comparing different insurers. Do you drive only 2,000 to 5,000 miles a year? Possibly prepaid car insurance could work for you. We back up our theory with a sample calculation.

For the example, we will assume a 40-year-old man. He has 10 claim-free years in his name. He wants to insure his 2015 Opel Corsa with third-party cascade insurance. Per year, he drives 6,000 kilometers. He is considering prepaid car insurance. Is that the best choice? Or is he better off tracking down the best and cheapest car insurance by comparing?

What does prepaid car insurance at Bundelz cost: €70 x 6 = €420 per year. When comparing, it comes out to: €315 per year

The motorist in our example would be better off comparing than opting for prepaid insurance. For motorists who really drive very little, it could possibly work out. But then you have to be sure you won't drive the car too much. Otherwise it will still be expensive insurance.

Read also:

Use claim-free years wisely

How can I prove my claim-free years?