Insurer trials pay per use car insurance

Posted :05-05-2006

A major car insurer has ordered an additional 35,000 in-car telematics black boxes for its car insurance scheme after a trial indicated it would be popular with customers.

The insurer launched its trial of the technology back in February 2002, concluding that "many motorists might benefit from a usage-based insurance product".

Black boxes record the time, distance and location of a vehicle's journeys, allowing monthly car insurance premiums to be calculated on vehicle usage and behaviour, providing an accurate basis for prediction rather than the current set of arbitrary criteria that discriminate against the young.

In addition to promising cheaper car insurance premiums for many drivers, the new technology also has potential environmental benefits. Pay per use insurance would provide quite an incentive for drivers to limit their car's use, hopefully reducing the number of journeys made every year.

Just one car insurance provider is looking to introduce the new system at present, but should it prove successful black boxes are expected to become standard across the industry.


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