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Black box spy in the car boot
CAR insurance is set for a major shake-up, with pay-as-you-drive policies based on a hi-tech 'spy' in the boot.
The black box devices will log details of all journeys, meaning lower bills for those who drive less often or in daylight. But civil liberties groups will be concerned about the Big Brother aspects of the system, being launched by Norwich Union.
Insurers will know exactly where a client has been and there will be fears that the information could be sold on to other companies. The information in the black boxes will also make it possible to calculate a driver's speed.
The firm says this will not be done unless a driver asks for it - after an accident, for example - but it admits that police could also request details. Pay-as-you-drive policies, in which drivers are asked to pay itemised monthly bills instead of an annual premium, are already popular in the US.
Norwich Union has been offering them to young drivers since earlier this year, as well as running a trial with another 5,000 motorists.
Now the company, which insures one in seven of Britain's 24m drivers, is opening the scheme up to all groups. The black boxes are in constant contact with global positioning satellites to log every detail of a journey - its time, place and length.
The details are transmitted to the insurance company using mobile phone technology. Drivers are sent an itemised monthly statement, similar to a phone bill.
Those who use their cars less often could end up paying considerably less than with their existing premiums. This would be good news for mothers who limit their motoring to the school run or a weekly trip to the supermarket.
Drivers can be charged as little as 6p a mile between 6am and 11pm, because accidents are less likely during the day. At night, however, the charge rockets to £1 a mile. There is also a fixed monthly charge to cover theft and damage while the car is stationary.
A Norwich Union spokesman said: 'It means we can personalise insurance policies. It is a much fairer product.'
Critics warn that many drivers, especially the young and the elderly, will be put off by the likely £200 initial cost of the equipment, which can also be dashboard-mounted.
An AA spokesman said last night: 'Some people will be concerned about having technology which tracks where they are and where they are going'.
The civil rights group Liberty said there would be 'concerns' if information was handed out to third parties. A spokesman added: 'Everything has to be done under the Data Protection Act and used only for the matter specified.'
Paul Smith, of the road safety lobby group M4 Protest said: 'I am certainly worried about the civil liberties aspects. We don't want the police being able to take these boxes and use the data for other purposes.'
Despite the doubts, the initiative by Norwich Union, Britain's biggest car insurer, is likely to force its rivals to follow suit. It will be the most dramatic change in the industry since the launch of Direct Line in 1985, which cut out the middleman and forced down premiums.
Insurance companies have already started to launch more personal products, which can be cheaper than standard deals.
A spokesman for Sheilas' Wheels, which sells women-only insurance, said: 'For too long, motor insurers have paid too little attention to exactly who is behind the wheel, the cars they drive or the journeys they make. With tailored policies, consumers really are in the driving seat.'
But pay-as-you-drive will not suit everyone. High-mileage motorists will still get a better deal from an annual policy.
Switching to pay-as-you-drive has already saved Matthew Smith around £1,000. The 18-year-old passed his test in February, but found a fully comprehensive policy cost £2,000.
Matthew, a health care assistant at Stoke Mandeville hospital in Buckinghamshire, switched to pay-as-you-drive and now pays only some £20 mileage a month, plus a £60 fixed charge. It is less than half his old bill.
He said last night: 'Having my journeys logged doesn't bother me. What matters is the extra financial freedom.'