'Pay How You Drive'

Car insurance brought in for young drivers.

'Pay How You Drive'

By acclaim driving team on 23rd August 2011 in News

'Pay how you drive' is a new type of car insurance that companies are targeting at young newly qualified drivers.

The insurance companies test how safely the new young driver drives and the idea is that the better the young person drives, the cheaper their car insurance becomes. However, if their driving is not up to scratch, it's going to cost them more for their insurance.

A couple of companies offer this type of car insurance with more expected to follow this year.  It's aimed at under-25s, these drivers are usually hit by the highest insurance premiums.

The latest to offer is by an insurance company who've launched 'smartbox'.

The Technology

The ‘smartbox’ is the same size as a mobile phone. It uses satellite technology to track how, and when, young drivers are using their cars.  It looks at their acceleration, braking, cornering and speed and general handling of the vehicle, as well as times they are out driving.

The company then posts this information on the policyholder's online dashboard, where they can log on and get their rating; from 5 which is excellent to 1 which is very poor.

Their insurance  premium is then re-calculated every 90 days.

Driving well can get the driver a discount of up to 11%, driving badly can cost the driver an extra 20% on their insurance premium.

Comments by a New Driver - "I passed my driving test last Year. I was getting insurance quotes of up to £2,000, which I couldn’t afford at all.  I looked at this technology and I didn't think it was an amazing idea straight away. I had to ask a few questions like what it was rated on, how many incidents I could have etc.

"But when I looked into it I thought, 'Actually it's quite good', it's making me a really safe driver and it's helping me save money.”

"I have always to consider my speed and it does get frustrating when people are behind you and trying to push you along the road.”

“On the good side I get complimented on my driving because it's really smooth and I have to constantly drive at my best.”

"It's like you're driving to impress your examiner on a driving test on every journey, you just want your driving to be good at all times.”

The Insurance Company’s Comments;

The Insurance Company stated that "The challenge is that young drivers have too many accidents and, because of this, the cost of insuring them is very, very high.  If we reduce the number of accidents we can lower the insurance costs.”

Young drivers who've just passed their driving test are a very high risk for every insurer, many do not want young drivers and this is why the premiums can be so high. We are informed that an average premium for this product is about £1,200.

The insurance company concerned expect around 45% of young drivers will get the 11% discount, and a quarter of young drivers will get the loading of up to 20%.

They aim to educate young drivers so they can go online every day and see how they're driving and hopefully this will help to improve their driving.

The insurance company concerned also send emails to give feedback on the drivers performance.

acclaimdriving comments:  "We think it's a good idea as it shows the young driver how good or bad their driving is. It should also help to cut down on accidents and make them better and safer drivers.”

At present all new young drivers who want to own their own cars are being penalised by insurance companies who set very high premiums for these drivers, this new type of insurance for these drivers is a much fairer way to set the cost of these premiums.  Many more young drivers will be able to afford to own their own cars under this scheme and acclaimdriving fully endorse this type of insurance scheme.

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