|Pay As You Go Car Insurance
Today (12 January) Norwich Union have announced that they are to introduce a new method of insurance, to be aimed at younger drivers. Pay As You Go insurance will involve younger drivers (aged between the ages of 18 and 21) installing a small device in their car that will monitor their car usage.
They will then pay for their insurance based on how many miles they travel and when they do their driving. The company have said that drivers will pay more to drive between the hours of 11pm and 6am, as these times reflect the hours of day when accidents are more likely to happen.
The measuring device (already dubbed a "black box" by some, in reference to machines used in aircraft) will cost £199 and the cost of travelling per mile will range from 6p at the lowest end of the scale to £1 per mile at peak times. The latter is a flat rate.
The new type of insurance policy reflects the company's attempt to gain new young customers. This age group have relatively high accident rates and thus would be expected to pay higher insurance premiums with most insurers.
Indeed, from personal experience, it will also be the case that driver's within this age group will also be suffering from not being able to have had time to gain a no claims discount that would otherwise be available to more experienced drivers.
Whether pay as you go car insurance will appeal to new drivers is something that only time will tell, but it certainly sounds like an innovative idea.