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Last Updated: Wednesday, 12 January, 2005, 10:29 GMT
Pay-as-you-go car cover launches
A Pay-as-you-drive mileage recorder
Pay-as-you-drive "black box" is the size of a video cassette
A pay-as-you-drive car insurance policy for younger drivers has been launched by Norwich Union.

An in-car "black box" style device calculates premiums based on when and how often the car is used.

The scheme is open to 18 to 21-year-olds and, as with mobile phone tariffs, drivers will pay more during "peak" times, between 11pm and 6am.

There is a one-off fee of 199 for the box, but Norwich says that this amounts to less than savings made on premiums.

"The scheme brings motor insurance into the 21st century by providing affordable comprehensive insurance for young drivers in return for driving at safer times," said Robert Ledger, programme director.

Pay-as-you-go generation

The policy works in a similar way to mobile phone tariffs.

Users pay a monthly fee for cover against fire and theft, and also a personalised rate for off-peak travel, which starts at 6p a mile.

Travel during peak times costs a flat rate 1 per mile.

A "black box" style device is fitted to the car
It uses Global Positioning Satellite (GPS) technology to record the journeys of the car
This information is then transmitted securely to Norwich Union via a mobile phone network
The first 100 off-peak miles each month under the policy, known officially as "Pay-as-you-drive" will be free, Norwich Union said.

The insurer calculates that younger drivers could save up to 30% a year off the cost of their premiums.

"The concept closely follows the approach used by mobile phone companies," Mr Ledger told the BBC News website.

"The standing charge is very similar to line rental and having a peak and off-peak tariff is very similar to the approach on mobile phone charging. We have done it in that way because of the group of customers we are targeting"

The launch of the scheme for younger drivers is part of a wider initiative being developed by the insurer. In August, it launched a two-year pilot scheme to investigate driving patterns for the development of pay-as-you-drive pricing.

The insurer says it has been able to launch a scheme for younger drivers prematurely because it already knows that time of day is a major factor for younger drivers.

It said the higher tariff for hours between 11pm and 6am reflected accident statistics for 18 to 21-year-olds.

Young people are at a much greater risk of being killed or seriously injured in car accidents between 11pm and 6am.

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