Are you aged between 17 and 25 and reckon you're a good driver but are forced to pay hefty insurance premiums due to the antics of your peers? If so, new pay-how-you-drive insurance policies are aimed at drivers such as you.
Hi-tech computer telematics will track by satellite not just when you are driving, but how fast, how you take corners, how you brake and even the car's G-force. It has been dubbed the "spy in the car" and now some of Britain's biggest insurers are introducing it as a way to offer young drivers, especially 17- to 25-year-old males, an affordable level of insurance.
The system was pioneered by a company called Insure The Box, but now the Co-op is wheeling out its offering, while the AA is thought to be not far behind. Marmalade, an insurer specialising in young drivers, is also launching a similar product next month.
Pay-how-you-drive policies are aimed at under-25s, the age group most likely to be involved in a car crash. Recently 17-year-old Jake Redshaw hit the headlines when he was quoted £33,000 by the AA to insure a three-year-old Vauxhall Corsa. The AA claims the quote was a mistake but even then the cheapest fully comprehensive quote Jake was offered was £6,000, twice the value of the car.
So how do pay-how-you-drive policies work? A "smartbox" is installed in the car which monitors the driving habits and skills of the driver, with premiums based on driving behaviour.
Insure The Box measures drivers' mileage, when they drive, and how they drive. Excessive G-forces, sudden braking or cornering and long periods of driving without a break are monitored.
Policyholders are charged by the mile and motorists initially pay for 6,000 miles. Once these are used up they can buy more miles as they need them. Policyholders are rewarded with "free" miles if they drive safely.
The Co-op's Young Driver Initiative works in a similar way. Drivers pay their premium up front and a smartbox is fitted in the car. The box transmits data from the car via satellite to the insurer. Drivers are assessed every 90 days based on four factors: braking and acceleration, cornering, speed and time of driving. If you're driving safely you get part of your initial premium back. But drive dangerously and your premium could go up. To help you know how you're doing, drivers get regular alerts. But if you drive really badly all the time the Co-op will cancel your policy. The Co-op reckons the policy will be on average £328 cheaper than competitors, and that more than three quarters (82%) of young drivers could make a saving.
Meghan Standeven, an A-level student from Southport, Merseyside, has taken out Young Driver insurance with the Co-op and is having the smartbox fitted. She says: "I saw the new type of insurance from the Co-op and as my insurance is quite expensive I thought I'd give it a go. It's going to cost about £750 while other insurers were quoting £1,000."
Meghan, 18, drives her parents' Citroen C1 to college, her part-time job, and for generally getting around. "I think I'm a good driver," she says, "definitely better than some of the maniacs you see on the roads. The smartbox will make me think about my driving and its red and green lights will help me know whether I'm going too fast or not. It will make my driving more disciplined and the financial incentive to drive well will definitely help."
David Neave, director of general insurance at The Co-operative Insurance, says: "Many young people are simply being priced out of owning a car due to the escalating cost of motor insurance for young drivers. To ensure we do not end up with an entire generation priced out of car ownership we are giving them a chance to prove themselves as responsible drivers, and dispel the assumption that all young drivers will drive badly and have accidents."
Much of this may sound familiar. That's because, unlike pay-how-you-drive, pay-as-you-drive has been around for some time.
Norwich Union (now Aviva) launched a pay-as-you-go policy in 2006 which looked at how often and at what times of day a car was driven. The product was withdrawn two years later due to low take-up.
Are pay-how-you-drive policies the way forward? It looks like it. Peter Harrision, head of car insurance at moneysupermarket.com, says: "Telematic providers are growing in popularity due to the mass premium inflation of insurance occurring within the market place, and as motorists look for ways to cut costs.
"It is important to pay attention to the terms and conditions of the policy to ensure that drivers stay within the guidelines. It is very much a case of 'watch this space' for potential future developments in this area of the car insurance industry and I wouldn't be surprised if established insurers are not already looking into this."
Plan your route
Young drivers should shop around and not just opt for a specialist product that sounds good. If you drive a lot of miles, at night or too fast, a pay-how-you-drive policy is unlikely to be the best option for you.
Guardian Money collected quotes for fully comprehensive insurance for a 24-year-old male student living in Nottingham driving a 10-year-old Ford Ka worth £2,500. The Co-op's Young Driver policy was cheapest with a £1,093 premium – based on only occasionally driving the car at night or carrying passengers. Using Moneysupermarket.com, Insure The Box returned a quote of £1,366, beating Admiral (£1,684), Elephant (£1,693) and Bell (£1,762).
We then ran another comparison on Confused.com for an 18-year-old female bank clerk living in south-east London driving an eight-year-old Ford Fiesta worth £2,500. Specialist female insurer Diamond gave the cheapest quote at £1,895. Admiral would charge £1,906 and Elephant £1,917. The Co-op Young Driver policy would charge a massive £3,406 and Insure The Box £2,402.