“Pay as you go” car insurance – will it work?

Basing car insurance premiums on how, when and where people drive will end the situation whereby safe, infrequent drivers subsidise risk-takers. However, the idea is unlikely to spark an insurance revolution.

A full 90% of us rate ourselves as above-average drivers, according to one well-known Princetown University survey. Statistically this is clearly impossible, but if you are convinced you are a low-risk driver the insurance industry might have a deal for you. The concept, trialled by Norwich Union, is called "pay as you go" (PAYG).

Users are charged for their car insurance on a monthly, rather than annual, basis. As well as factors such as location and type of car, the cost varies according to how often and at what time of day you drive. Norwich Union says young drivers are ten times more likely to have an accident at night than during the day.

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Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.