Pay As You Drive Car Insurance

Following the success of trials lasting over 2 years, Norwich Union successfully launched pay as you drive car insurance in October 2006. Commentators in the industry see this product revolutionising car insurance as we know it and some who take out this new type of cover may even see their premiums fall.

What is Pay as you drive insurance?

Quite simply, technology in the form of a transmitter known as a "black box" is fitted inside the car to record the time of day and location of travel. In addition, motoring speed is also recorded. Why? The insurance company receives this data via satellite which enables it to calculate your monthly insurance premium based upon when you drive and the mileage incurred.

Norwich Union freely admit that not every driver will benefit from buying this type of car insurance which is why they have introduced an interactive feature on their internet site that allows browsers to enter details such as annual car mileage and usage. The results which are automatically displayed determine whether or not savings can be made in terms of insurance premiums. This is particularly useful for those motorists who are unsure regarding suitability.

It is anticipated that other Insurers will enter the pay as you drive car insurance market with their own products which in turn should introduce greater competition allowing consumers to shop around the best value for money.

Update 2009, Norwich Union have since pulled this product from the market, it is hoped, however, other Insurers will launch similar products.