Pay-per-mile systems try to match cost with actual driving distance. A small fixed amount is charged each month, and the rest depends on mileage tracked by a device or app. In theory, someone who rarely clocks high numbers could reduce costs. Several insurers promote this model as a flexible choice, hinting that drivers could benefit when travel remains modest. However, the advantage seems to shrink once mileage grows beyond a certain point.
Industry data suggests that these usage-based policies make the most financial sense for anyone driving fewer than 7,000 miles per year. Once a driver moves far above that threshold, the savings begin to disappear. Many working taxi drivers fall nowhere near this low bracket. A significant share actually covers more than 35,000 miles annually, a figure representing roughly 23% of the entire sector. At that level, distance-based pricing tends to outpace what a traditional fixed policy would cost by the end of the year.
Still, the model does offer some strong examples of potential savings for the right driver profile. Zego Sense, one of the major UK providers of telematics-linked cover, reports that safe drivers using their app can see annual costs starting around £1,978. This sits well below the typical industry average, which often rises beyond £3,000 for newer drivers. That gap might look appealing, yet it depends heavily on behaviour, mileage control, and consistent app usage. Not every driver can maintain the conditions required to secure the lowest figures.
Low-mileage drivers also represent a relatively small segment of the whole industry. Only about 11% of taxi drivers fall under 10,000 miles per year, including a very small 2.1% who stay beneath 5,000. This small group stands to benefit most from usage-based pricing. For them, a pay-per-mile plan may genuinely reflect their work style and could keep annual expenses from creeping too high. For anyone else, the numbers may lean in the other direction.
Alongside these mileage-based comparisons sits the broader need for strong protection. This is where taxi insurance comes into view. At its core, it is a form of cover designed for drivers carrying paying passengers, whether they operate privately or through public hire. It can include protection for damage, theft, fire, and incidents involving third parties, depending on the level of cover taken out. Many drivers choose it because it supports their ability to stay on the road even when a setback interrupts work. The main benefit often lies in stability. Without dependable cover, a simple crash or unexpected fault could remove a driver from the road at the worst possible moment.
Pay-per-mile plans do not replace the need for taxi insurance. They simply alter how the cost is measured. Some drivers may feel uncertain about whether distance-based pricing is fair, especially if their mileage shifts from month to month. Those who occasionally take extra shifts during holiday periods may notice their fees rise sharply. Others who work in quieter areas might welcome the flexibility. The decision often depends on personal patterns rather than broad assumptions.
A driver considering a usage-based model might study their own annual mileage before making a choice. If their total remains steadily low, they could see value in paying only for what they drive. If their work frequently changes or grows busier during peak seasons, a traditional policy may feel safer and more predictable. Taxi insurance works alongside these decisions, giving drivers a consistent base of protection even while payment structures vary.
Pay-per-mile cover may stay a niche option in the UK taxi world, but it can still help the small group who truly fit its profile. For everyone else, the best choice might sit in the more familiar annual model that does not shift each time the meter runs.
