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What is pay as you go delivery hire and reward insurance?

Last Updated May 2023 MQT Editorial Team

This type of cover is a form of hire and reward insurance. The cover provided with the necessary legal cover for you to work as a delivery driver. The pay as you go cover is only activated when you are working and making delivers. The idea being the cost of insurance is not a flat rate, but based on usage. The more you use, the more you pay and vice versa. This makes it a good fit for those that work on a part time or seasonal basis to supplement heir income.

pay-as-you-go delivery insurance

If you are using your private vehicle, car, van or bike to provide a delivery service you need a special type of cover often referred to as pay as you go hire and reward insurance. The pay as you go or use model is relatively new to the UK insurance marketplace. First introduced in 2013 under the Cuvva brand. In basic terms, it allows customers to buy pay-as-you-go insurance via an app. This pay as you use approach provides a form of cheap hourly car insurance that covers you for providing a delivery service. This disruptive technology is popular in all sectors of the UK insurance market. PAYG courier insurance is an offshoot and is perfect for fast food delivery drivers that operate for the local takeaway or via Deliveroo. ZEGO insurance was one of the first to provide this insurance model for delivery drivers and couriers.

If you are an actual owner of a restaurant you are most likely looking for restaurant insurance which is a completely different type of policy. The panel can provide insurance quotes for takeaways and restaurants and delivery drivers.  

The pay as you go delivery insurance is in addition to your social, domestic and pleasure vehicle insurance you took out to register your vehicle which can be third party, third party fire and theft or comprehensive. This extra type of coverage can be added to anyone of those.

Pay as you go delivery insurance is the ideal coverage for part-time delivery persons and couriers who work less than 20 hours a week. 

How does pay as you go delivery insurance work?

The process is simple. If you are not an existing customer, you must first create a central insurance management account with an insurance agent that offers hourly courier car insurance.  The deposit you place with them for this coverage can be as low as £25. Upon picking up a package to be delivered, you activate your coverage using your firm reference number. When you are done making the delivery, you deactivate the coverage. If you provide a delivery service by bike or scooter, you can also apply for PAYG bike insurance.

The activation is accomplished with a black box mounted to your vehicle that tracks your activity.

Pay per use model has gained popularity in the food delivery sector and also the car rental industry. Rental car companies need only activate the insurance when they actually rent out the vehicle. 

In summary, the pay as go (PAYG) model is normally available as on a pay per mile or pay per time basis. This payment on actual usage will be in addition to a flat rate that you pay even if you were never to use your car. It still works out cheaper if you do less than 6,000 miles per year or as in the case of the delivery sector you need extra cover on top of your basic car insurance.

  • Pay per mile : This model will employ a telemetric device that records miles driven, and the cost is then based on actual miles driven, this will benefit occasional users.
  • Pay per hour : Similar to pay per mile, the charge will be based on the actual time on the road and not the number of miles. 

What does the black box track when activated?

The black box is a telemetric device that records how the person drivers. For younger drivers or new drivers, the installation of one will help lower their Social, Domestic and Pleasure insurance premiums since it can prove they are driving safely.

  • The time you are making a delivery.
  • How fast you accelerate.
  • How suddenly you brake.
  • Your speed when going around corners.
  • The mileage you achieve.
  • A GPS is part of the black box so your location is always known.

The number of hours you are working can be tracked through your insurance company’s website. Some insurance companies have an app that provides you with the details that you need, like hours making deliveries. If you need fast food delivery insurance, it may be prudent to look at pay as you go insurance options.

Benefits of PAYG Delivery insurance

  • Flexible : As we touched on, the one big advantage of this type of cover is that it is only activated when you are actually working.  
  • Affordable: This type of policy will for most work out cheaper, as you only pay for what you use. For those that work long hours, every day it may not be the cheapest option  
  • Switch or Suspend : If you are just testing the waters and not sure if you will commit full time, then this policy wins over having to pay up front for an annual cover. 

How much does pay as you go delivery insurance cost?

Because this is a short term coverage, most insurance companies charge by the hour or the miles you travel. The type and size of vehicle you have is what determines the cost per hour or mile. The age of the named driver also factors into the cost per hour or mile.

The list below is a rough guide to the cost of common delivery vehicles rated by the hour, covering the average named driver. For drivers under the age of 25, the cost will be more.

Vehicle TypeCost per hour
A small economical car£0.80
Large car with bigger the engine displacementRange £0.80 - £3.00
Small Van£1.00
Larger VanMaximum of £3.00 per hour for larger vans

PAYG - Pay as you go Insurance FAQ's

If I work for Amazon, Deliveroo  Just eat Uber Eats, Do I Need Hire & Reward?

Special delivery insurance is required if you work for any of these companies. See our guide for Uber Eats delivery insurance.

What are the different types of cover available with PAYG car insurance?

Pay as you go insurance is normal only available as fully comprehensive cover, but some brokers will also provide third party level, the legal minium.

What type of insurance covers food delivery?

The type of insurance required for the delivery of food is a form of hire and reward insurance. Standard car insurance will normally just provide cover for social, domestic and pleasure use. This is not a suitable cover for delivering food and if stopped you could be charged with driving without insurance.  Food delivery insurance is a specific product developed to provide cover for those that work in food transportation services, some examples include Deliveroo, Uber Eats, and Just Eat.

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