“Pay as you drive” car insurance

A dramatic change in the way you pay for car insurance could be over the horizon. The launch of “Pay As You Drive” car insurance from Norwich Union takes a whole new approach to the way car insurance is priced.

Previous means of pricing car insurance have been very broad and often responsible drivers have ended up paying for the reckless ones and infrequent drivers paying similar rates to those who driver daily.

Norwich Union has set to change all this with their new “Pay As You Drive” pricing scheme. It works on a system where you pay for miles you have driven based on an On-Peak and Off-Peak basis. You are still fully insured the whole time however you will pay less when you drive at what are considered to be safer times of the day.

The charge for driving at night is at a higher premium because statistics have shown that young drivers account for 45% of fatalities on the road between 11pm-6am. At the same time, you're less likely to have an accident between the hours of 6am-11pm statistically. There are also 2 different age categories; “18 – 23” and “23 – 65.” Off-Peak miles are charged at a personalised rate where as all On-Peak miles are charged at £1 per mile, 100 free Off-Peak miles are included with the package.

For this system to work you must have an in-car device installed that uses GPS technology to monitor and send your journey information securely to a central computer. The data collected from the in-car device is then reflected in your premium based on your driving patterns.

Other benefits can also be had from having this system installed in your car. An In-car Assistance Button is installed for use in emergency situations such as a break-down or accident. If you require assistance you can press this and full details of your car's location will be sent directly to Norwich Union who can send you break down assistance or file an accident claim.

GPS navigation or “Smartnav” is also available through this device to prevent you from getting lost and the “Safe Speed” system alerts you of speed cameras. A 30 day trial for these services is included in the package how ever further costs may be involved if you wish to these to continue.

In the trials of this scheme the media speculated that this kind of insurance would just not be taken up by the UK public because of people's hang ups about privacy. It was speculated that people would not take to the idea of having a “Black Box” fitted in their cars because of fear of surveillance or the so called “Big-Brother Aspect.” However this was not the case and applicants for the trail flooded in and Norwich Union reported that they could have filled the trial more than twice over, subsequently Norwich Union have now taken this insurance policy live and made it available to all who are eligible.

Across the pond in the US Progressive Insurance has been around for a while, offering customers up to 25% discount on their insurance, with an additional reduction of 5% for each exchange for their driving data.

If this new technology driven car insurance policy becomes popular it could set a trend and other car insurance companies may follow, This could lead to a total overhaul in the car insurance world and in turn more dramatic changes in the way car insurance is priced could follow, benefiting all drivers in the UK.

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