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Insurer Norwich Union has just extended its use of telematics technology with the launch of two new 'pay-as-you-go' insurance products for private motorists. The two policies - one aimed at the under-24s and the other at older motorists - involve paying a base rate that is approximately a third of a normal annual premium with additional monthly charges based on actual usage. Charges vary for each of the two groups depending on time of day, types of road used and distances travelled. Charges  for those aged 24 and over range from just 1p/mile on motorways during off-peak periods to 12p/mile for urban streets at peak times.

NU says those who do not regularly commute in the morning rush hour and who drive less than 8,000 miles a year are the most likely to save. Younger drivers will be charged from 5p to £1 per mile, depending on the time of day, the idea being to discourage this group from driving between the hours of 11pm and 6am. NU will pay for the telematics equipment required - which it is sourcing from Trafficmaster - though customers will face a £50 installation charge. Additional services such as satellite navigation will also be offered. A spokesman says further telematics-based pay-as-you-go products, including on the fleet insurance side, could be in the offing.