New figures on compulsory motor insurance published by the Czech Insurers’ Bureau (ČKP) reveal a surprising finding: at least one million Czech car owners are paying more than necessary for their car insurance – both compulsory motor third-party liability insurance and comprehensive cover.
One million Czech drivers may be overpaying for car insurance
There are currently just under 10 million vehicles registered in the Czech Republic, including almost 7 million passenger cars. What many people do not realise is that at least one third of these passenger cars – more than 2 million vehicles – have significantly below-average annual mileage. In other words, they cover fewer than 12,000 kilometres a year.
These are typically cars that are not used for daily commuting or business purposes: second cars in a household, private cars owned by people who also have a company car, cars driven by seniors, vehicles used by people working from home, or cars used only occasionally. Many of them cover no more than 5,000 kilometres a year.
Yet around one million of these drivers are still paying for insurance as if they drove much more. According to ČKP statistics, only two insurers in the Czech market – including Pillow – offer discounts of up to 35% for vehicles with below-average mileage. Together, these two insurers cover around 1 million passenger cars at a reduced price. Owners of the remaining one million low-mileage vehicles may therefore be paying more than necessary, with their premiums calculated in much the same way as those for company cars that travel across Czech roads and motorways every day.
Paying the same, despite driving less
The more kilometres a car drives, the higher the risk of an accident. Every driver understands this. Yet traditional car insurance has for many years worked almost entirely on a flat-rate basis – regardless of whether a car drives 5,000 or 25,000 kilometres a year.
Mileage-based insurance was introduced in the Czech Republic around ten years ago and brought a fairer approach to the market. Pillow allows vehicle owners to save money, with the highest mileage discount – for annual mileage of up to 5,000 kilometres – reaching as much as 35%. Better prices are also available for cars driving up to around 12,000 kilometres a year. Over the past five years, this fairer approach has attracted more than 300,000 vehicles to Pillow, making it the fastest-growing insurer in the Czech Republic.
Why are one million drivers still missing out?
There are several reasons – none of which truly reflect how mileage-based insurance works in practice.
They simply have not heard of it
Although mileage-based insurance has been available for almost ten years, many people still see it as a relatively new concept. Naturally, customers will not hear from their traditional insurer about a cheaper alternative offered by a competitor. Many also rely on their adviser, but some intermediaries are still reluctant to ask clients about their annual mileage, leaving them to pay more than necessary.
They worry it will be complicated
A common myth is: “That must be complicated.” But mileage-based insurance is simple and transparent. The driver chooses an annual mileage limit that reflects how they use their car, and the lower price is calculated immediately. The client benefits from the reduced price from the very first day of insurance.
They are afraid of exceeding the limit
Another common concern is: “What if I drive more than planned?” But this is not a problem. Exceeding the mileage limit is neither risky nor penalised. If the car drives more, the client simply pays for the extra kilometres. The typical price is twenty hellers per kilometre — so, for example, 500 extra kilometres cost CZK 100. And it works both ways: if the car drives less than expected, Pillow refunds the money for the unused kilometres. Many clients are pleasantly surprised when they receive this refund at their policy anniversary.
Fairer and better-value insurance
Pillow’s mileage-based insurance reflects the reality of today’s world: cars that spend most of their time parked do not carry the same risk as cars used on the road every day. Even so, one million drivers are still paying too much for cars they use only occasionally.