Pay as you Drive: the Secret to Cheaper Car Insurance?

It would sure help us all if the insurers gave us a definitive list of what can help bring premiums down and more importantly what we're doing that hikes the prices up! The trouble is it is very unlikely the gods of insurance are going to bestow a stone tablet containing the secrets to cheap car insurance. This makes any statement from the car insurance dealers a welcome insight.

This is exactly what Erik Nelsen of Norwich Union, the UK's biggest insurer has done. He spoke in 2004 of the possibility for a select group of UK drivers to cut their insurance quotes by up to 30 percent by taking a new approach to insuring their vehicle. The scheme is called "Pay-as-you-drive" and anyone who is familiar to mobile phones will recognize the concept, rather than paying for unlimited usage of your vehicle you only pay for however much you use your vehicle.

How does this work? Well pilot schemes conducted by the insurer saw 5,000 policyholder's vehicles fitted with a GPS device or "Black Box" no bigger than a standard DVD case. This device reports accurate data on mileage direct to the insurer. A monthly usage bill is sent to the driver based on an agreed amount per mile driven.

The scheme was a huge success and has now been rolled out as an alternative to paying car insurance, this scheme especially benefits people who fail to reach even 5,000 miles a year. They say that by providing more information about how you drive can help them in underwriting your car insurance.

Whilst it is only available on the one insurer at the moment it looks certain that this will be offered as an alternative method of getting insured with other insurers and in many cases is bringing about the hallowed cheap car insurance that we all search for. As well as this scheme it is also advised that you get your car insurance quote online as savings of 10% don't come along everyday!