Motorists who drive less than 4,000 miles a year could save up to £168 on their car insurance by swapping to a different policy research by Compare the Market has found.
The data, from Compare the Market, found 17% of drivers who make fewer journeys could save up to £168 on average by taking out a pay-by-mile policy instead of an annual comprehensive car insurance policy.
The average cost of a pay-by-mile policy is up to £477 compared to £585 for a comprehensive policy.
While the mean price of pay-by-mile insurance falls to less than £414 for motorists who drive fewer than 4,000 miles per year compared to £582 for a comprehensive policy.
Usage-based car insurance is growing in popularity as motorists are typically driving fewer miles each year, Compare the Market said.
The proportion of drivers switching to By Miles, a pay-by-mile provider has risen by 125% since 2020.
These policies are designed to be a fairer option for low mileage drivers because these motorists use their cars less often, and so are less likely to have an accident or make a claim.
By Miles analysis of the latest MOT data found the average annual mileage for UK drivers dropped by more than 1,000 miles to just 5,398 in 2021 - a 24% drop compared to pre-pandemic levels.
Meanwhile, 74% of motorists now drive less than 7,000 miles per year, By Miles found.
Julie Daniels, motor insurance expert at Compare the Market, said: "Flexible working, environmental concerns, and the increasing cost of driving mean many motorists are typically driving fewer miles each year."
The price comparison site shared research recently which found that drivers were paying £105 more on average for car insurance in March compared to the year before.
Younger drivers aged 16 to 24 were found to be paying significantly more, £1,464 on average in March 2023, compared to those aged 65 to 79, who paid £299.
The news came as e-bike engineers Swytch Technology revealed 6.4million people across the UK say they plan on not owning a car in the next five years and 9.1 no longer use their car for short journeys.
Swytch Technology have cited rising costs associated with car ownership and a focus on sustainability as key factors contributing to this trend.
How to cut your car insurance bill
Car insurance is a legal requirement in the UK and has to be renewed yearly.
The three main types are: third party, third party fire and theft, and fully comprehensive.
You should use a comparison website to check for the best deals when your current policy is coming to an end.
Once you've found the cheapest price, you can either switch or try to haggle down your current provider.
Martin Lewis' Money Saving Expert (MSE) website says the best time to start looking for car insurance is 23 days before your current policy expires.
You should also see if you'd be eligible for cashback on your insurance policies on sites such as Topcashback and Quidco.
