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Pay As You Drive car insurance


UK insurance giant Norwich Union has just launched a new Pay As You Drive car insurance service. When you sign up they install a GPS unit into your vehicle (Audi A8 excluded for some bizarre reason) which tells the company what journeys you do, and you then receive a monthly itemised bill for the insurance costs of each trip. You pay £50.00 for the GPS box, a flat monthly fee to cover fire and theft and then a charge for the journeys. They’ve priced it at between 7p a mile for urban journeys and 1p a mile for motorway, so it’s quite aggressively priced for those who don’t do commuter driving or only use their cars on the weekend. It’s a really superb idea and the surprise is that it’s arrived so soon, bearing in mind that GPS technology has only recently matured enough to be cost effective. 


They’re also offering a special rate for young drivers which charges a premium if they drive at night (which apparently is a peak accident period – surprise) which they say should help reduce accidents for this susceptible demographic. The final icing on the cake are the additional high tech GPS options such as an ‘emergency button’ to summon help in times of breakdown, a theft retrieval service and the opt-in satellite navigation for an additional £1.00 a journey. I really like this idea of paying for what you use, and hope it succeeds big time. It’s interesting though that this is exactly the type of technology that the UK government will probably use to implement the road pricing tax, if they ever adopt the idea nationally. What a great way to encourage fast mass adoption, eh? Mmm…..


  • Very cool idea. Being a freelance programmer, I really only use my own vehicle to go get a pack smokes or beer from the corner store to fuel my late night working… I’ve driven my car maybe 100 miles in the past 6 months (always ride with other people when we go out somewhere). I hope to see this sort of thing with US insurance companies in the near future. I would be the perfect case for this sort of billing structure.

  • Yep, I agree 100% Nick. Why should those of us who do limited mileage pay increased premiums to cover high mileage, higher risk commuters, crazy nutjob 17 year olds on crack and the like?

  • Rule #1: Insurance companies are NOT your friend.

    They are also not stupid.

    They average out the odds of all their members and the number of miles they drive over the course of every year. And they are fastidious about returning a heathy profit to their shareholders above every other concern.

    A “pay as you go” system will only end up costing you MUCH MUCH more as they have to add charge after charge to account for your every little move. And do you really want your insurance company tracking your EVERY move and driving habit everywhere you go???

    This will only lead to bad things….

  • The A8 is excluded because there isn’t so much as a whiff of GPS or GSM inside the car due to the glass coatings.

    I’ve had to install a full ‘phone car kit and an external GPS antenna.


  • Wow Ian, that’s totally weird. Why would they do that at Audi?

    Jerry, I hear exactly what you say, but here’s the thing. If I drive 100 miles a year, they’re going to have a real problem with over-charging me for my insurance, whereas I know that right now I’m paying over the odds because of my low mileage.

    Now I’m not doing 100 miles a year, but you see my point? The bit about knowing where I go? Yeah well, the credit card companies know a fair amount about my movements right now, and let’s not get started on the 11,000 CCTV cameras or whatever…. :-)

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