Pay as you drive car insurance
What is Pay As You Drive car insurance?
Pay As You Drive or Pay As You Go car insurance works the same way as 'pay as you go' mobile phones, that is, you only pay when you use your car. Brilliant, don’t you think? If you are using your car only during weekends, you shouldn’t be charged car insurance when your car is parked, right? Well that’s why Norwich Union came up with two new policies, one for 18-23 and another one for 24-65, so that people pay car insurance based on how much they use their cars.
Because this model is designed mainly for young drivers who pay too much for car insurance, Norwich Union has decided to give them 100 miles free to begin with whereas the more mature group will start paying from the very first mile they do.
How does the Pay As You Go car insurance work?
A device is fitted to your car which sends the details of your journey through satellite to your insurance company. At the end of each month, you will receive a bill calculated from the information sent by the tracker device for the journeys you’ve made.
The way your bill is calculated depends on two main factors – the time of the day and the road type for your journey. During peak times which are from 11pm to 6am, drivers could be paying as high as £1 for each mile travelled because that’s when most accidents occur. Hence the policy discourages night driving.
Also travelling at 70mph on a motorway is cheaper than driving at 30mph in town. So depending on which roads you have been taking for your journey, they will be reflected in your bill.
You could be wondering how much the pay-as-you-go car insurance policy charges per mile. Well for a mature person with good driving history, it could be 2.5p/mile around town, 0.29p/mile on motorways and 0.41p/mile on dual carriageways. These are just indications and if you want a more accurate pricing, you should contact Norwich Union (0800 0920 9561) and ask them for a quote.
Is the Pay As You Go car insurance worth a try?
First of all, you will need to get a tracker device fitted to your car before you can take the pay-as-you-go insurance. The tracker device is essentially a Global Positioning System (obtained free from Norwich Union) and will be installed by the RAC In-car Services at a convenient time and location for you. You will then be billed every month for the miles you’ve done. So young drivers who are quoted £3000 for car insurance will save the most because they will pay only for the journeys they make but they should avoid peak times to reduce their bills at the end of each month. Rest assured that you will not pay more than a traditional car insurance when you pay as you drive!
Although there are claims that drivers doing less than 6000 miles a year and those new drivers paying high premiums will save a lot of money, it is important to understand that the tracker device monitors the speed of the car among other details. Therefore it could play against you in the event of an accident and affect your ability for claims. However, the good thing about this tracker device is that it makes finding your car easier when stolen. You should also be aware that the pay-as-you-go car insurance is available for comprehensive cover only.
UPDATE: The Pay As You Drive insurance scheme has been cancelled by Norwich Union in June 2008, so it is no longer available! The closest thing to it is the eCar Pay As You Go Insurance which gives you the opportunity for a monthly contract with fixed fees instead of an annual one.
