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Last Updated: Thursday, 5 October 2006, 11:32 GMT 12:32 UK
Per-mile cover 'to cut accidents'
The pay as you drive device
Mileage is monitored through GPS technology
A scheme to charge motorists by the mile for their car insurance has been welcomed by a road safety group.

AA Motoring Trust said Norwich Union's pay-as-you-drive car insurance policy for drivers could reduce accidents.

Under the scheme, an in-car "black box" device calculates premiums based on when, and how often, the car is used.

The AA said charging people more for driving late night when many accidents occur could change driver behaviour, particularly among the young.

"During the early hours of the morning, you are 17 times more likely to be involved in an accident if you are a young driver," said Andrew Howard, head of road safety at the AA Motoring Trust.

"Anything which makes young people think again about taking to the roads during these hours - such as having to pay high insurance costs - is likely to have an effect on accidents."

Pilot success

The nationwide roll-out of Norwich Union's pay-as-you-drive cover follows a successful pilot scheme, during which 5,000 drivers who were fitted with in-car devices to monitor when, how often and on which roads they drove.

The company will offer policies for motorists with a sliding scale of charges in two different age groups.

Charges for drivers aged 24 to 65 go as low as 1p a mile for off-peak motorway driving while under-23s will be charged up to 1 a mile when driving at night.

The company has said the latter charge will discourage young drivers from taking to the road between 11pm and 6am, which is seen as a high-risk time for accidents involving inexperienced motorists.

Low-mileage reward

Data collected from the GPS-based devices installed by Norwich Union will be used to work out how much drivers need to pay on a monthly basis.

A "black box" 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 time of the day, type of road and mileage of the drive is taken into consideration when working out the monthly charge to customer.

Norwich Union's Iain Napier said the scheme had the potential to reward low-mileage drivers with cheaper premiums.

"The launch of pay-as-you-drive insurance will give motorists access to insurance that is specifically tailored to them and their driving habits," he said.

Norwich Union's scheme is voluntary at present - but if such schemes were to become compulsory, the AA Motoring Trust said it would like to see safeguards.

"Ultimately, it maybe something parliament has to get involved in," Mr Howard told BBC News.

"How would the information about people's travelling patterns be used, and who would have access to it?"

Would you be willing to try pay-as-you drive car insurance?

Your comments:

Anything that cuts the cost of my premium is worth trying.
Digby Chat, United Kingdom

I would not be willing to try pay-as-you drive. I think that the system is flawed as many people I know have had accidents based on road tarmac quality and weather conditions. By this reasoning, taking a longer detour around a known accident black-spot would actually cost more, which is surely the opposite of what they are trying to achieve!
Dave Edwards, Romford

I think this would be a fantastic idea, although I am not a low mileage driver and I regularly use motorways it gives me the choice of whether to spend the money.
Robert Brewin, Basingstoke

What about young people who work in, casinos, pubs, clubs or even shift workers? Many under 23s are involved in employment at unusual hours. Not every young driver is joy riding around with a car full of mates.
Peter Joseph, Cardiff, UK

Of course, as with all these cunning schemes, it will affect those of us living outside major urban communities where there are few, if any, public transport alternatives.
Michael, Norwich

I have a trade insurance policy as I buy and sell cars part time. How would this affect me? I can't have one in each car even if I just take it for a demonstration. What would happen if someone else drives the car?
Dave, Staffs

See how the scheme works

Pay-as-you-go car cover launches
12 Jan 05 |  Business
Pay-as-you-drive car cover tested
17 Aug 04 |  Business

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