Off-peak car insurance launched

Pay-as-you-go motor insurance using a "black box" device fitted inside cars was launched today by insurer Norwich Union.

The cover is aimed at younger drivers and is designed to offer lower cost cover. Norwich Union says that young drivers could see a saving of up to 30% a year with the device.

Drivers aged between 18 and 21 will be able to pay insurance premiums according to where and when they drive, calculated in a similar way to mobile phone tariffs, with off-peak rates.

The black box fitted inside the cars uses global positioning satellite (GPS) technology to record the journeys made in the car, transmitting the information to Norwich Union over a mobile phone network. It costs ?199, including installation, and is bought direct from the insurer.

Norwich Union launched the pilot pay-as-you-drive scheme in August and gathered pricing information from the 5,000 participating volunteers' driving patterns.

Driving time is a major factor for younger people, as there is a lot of evidence to suggest that late-night driving is the most dangerous time.

Programme director Robert Ledger said: "There's no getting away from it. Government statistics show that this age group is more likely to be killed or injured in road accidents between the hours of 11pm and 6am, and this has been factored into tariffs for this product."

Policyholders will be charged a set monthly payment, and premiums for different times of the day will be charged at different tariffs, with a personalised tariff for every mile travelled during the off-peak (between 6am and 11pm) time zone, and a flat rate of ?1 a mile during peak (between 11pm and 6am) times.

A range of benefits include 100 free off-peak miles a month, and a built-in car locator, helping customers to find their car if it has been stolen.

Drivers will be able to control their premiums by driving at off-peak times, the insurer said.

In a statement responding to the launch of the scheme, the AA said: "We welcome Norwich Union's expansion of its 'pay as you drive' insurance pilot to young drivers as a contribution towards tackling the problem of uninsured drivers and helping to find ways of reducing premiums for young motorists."