Young drivers now have the option of taking out a Pay As You Go car insurance policy to reduce their motoring expenses.
Developed by Peterborough-based Marmalade, the new scheme is in response to customer feedback. The changing nature of young driver attitudes has also played a part.
Smartphone telematics will allow drivers to track their miles, and only pay for the insurance coverage they actually need.
How does Pay As You Go car insurance work?
Marmalade’s Pay As You Go policy is aimed at drivers aged between 17 and 27, driving a car owned by a parent or grandparent. This will allow young drivers to be added as a named driver, but still earn their own No Claims Discount.
Parents and grandparents will be relieved to know that their own No Claims Discount is not placed at risk. This is because the Pay As You Go scheme is independent of any existing insurance policy applied to the vehicle.
A bespoke ‘App and Tag’ system will be used to track exactly when young drivers are behind the wheel. An app installed on the new driver’s smartphone will pair via Bluetooth with the ‘blackbox’ tag in the car.
Driving habits will be recorded, similar to other telematics tracking systems.
Insurance policies begin with a ‘bundle’ of 500 miles included, with prices starting from £195. Drivers can then automatically top-up their policies with 100 to 500 extra miles, with prices adjusted down for safer drivers.
Less miles, less money
Marmalade admits that Pay As You Go will not be suited to all young drivers.
It cannot be used to cover learner drivers, or cars where the inexperienced driver is the actual owner. Cover is capped at vehicles costing less than £30,000, whilst the policy is designed for drivers who will cover less than 3,500 miles each year.
Crispin Moger, CEO at Marmalade, commented that: “It’s been well-documented over the years that annual mileage driven is on the decrease and this paired with a more eco-conscious generation means we are seeing young people drive only when necessary, often refraining from purchasing a vehicle of their own if they don’t have a dedicated use for it.
“Our own insights from customers show 74% have driven less than they would otherwise in 2020 while 47% expect to drive 4,000 miles or less in total across the year.”
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