The insurance, which has been sold by Norwich Union since October, uses the Global Positioning System of satellites to keep track of where, when and how far a car has been driven to determine rates each month.
Journey details are collected by a device the size of a compact disk case that is installed under the dashboard of the car. Each night, a mobile phone link automatically transmits an encrypted account of the car's exact movements — road-by-road, mile-by-mile — in order to produce an itemized monthly bill.
"The idea is that people should be charged for the risks that they take while driving, not the risks taken by others," said Kay Martin, who heads the "Pay As You Drive" project at Norwich Union. "We find that knowing the time and location of a driver gives a pretty good indication of their accident risk."
Initial studies by the insurance company, which involved monitoring 5,000 drivers for two years over more than 100 million miles, or 160 million kilometers, turned up a few reliable location- and time-based predictors of accident risk:
Drivers in morning rush hour are 50 percent more likely to have an accident than drivers out on the weekend.
Drivers on low-speed country or urban roads are 10 times more likely to have an accident than drivers on highways.
Serious accidents involving fatalities are far more likely to happen from midnight to five in the morning than at any other time of day.
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