LONDON, United Kingdom (Reuters):

The "pay as you go" concept is nothing new: from mobile phones to utility bills, consumers are able to pay for goods and services at the point of consumption.

Now, Britain's first "pay as you drive" car insurance policy has taken to the road.

The cost of the motor cover, from Norwich Union, will vary depending on when, where and how often motorists use their cars, determined by data from in-car global positioning system devices.

Customers will receive regular bills based on car usage, including the time of day journeys are made, the type of roads driven on and the mileage clocked up in the process.

Itemised bills - like those in the mobile phone industry - will detail the premiums charged for each journey, and the monthly total.

The usage-based car insurance, which will cost from a penny per mile, has been designed to help drivers control insurance costs and could save some up to a third on their current premiums, according to Norwich Union.

Iain Napier, director of "pay as you drive" insurance, said the cover would give motorists access to cover tailored to them and their driving habits Ñ and could reward them with cheaper premiums.

"We're confident that 'pay as you drive' insurance is simply a fairer way of calculating premiums and gives customers greater control, flexibility and choice," he said.

However, financial experts warned that motorists should not assume the policy would save them money.

REFRESHING

Richard Mason, director of insurance at independent price comparison service Money-supermarket.com, said it was "refreshing to see insurers using today's technology to match insurance costs more closely to customers' actual driving behaviour", but warned the cover was not right for everyone.

"Unless you're an exceptional case - such as a motorway-loving, low-mileage, off-peak driver - working out whether you will save money won't be easy," he said.

"It relies on accurately predicting which types of roads you will use, how often you drive and at what times. Getting your motor insurance maths wrong could cost you."

He predicated that the new approach would take off in the long run, but said Money-supermarket.com's research indicated that initial take-up would be slow.

Less than one in ten motorists would be prepared to have a monitoring device fitted to their car, even if it reduced their insurance premiums by 30 per cent, while 27 per cent would not contemplate installing one no matter how much it could save them, moneysupermarket found.

Norwich Union unveiled the cover on Thursday following a pilot of 5,000 motorists. It has been trialling the "pay as you drive" insurance since 2004.

Charges will take into account the prevalence of accidents at various times or day and on particular roads.

SERIOUS ACCIDENTS

Driving during a morning weekday rush hour is 50 per cent more likely to result in an accident than driving at weekends or in the evening, while serious accidents are more likely to occur at night, according to data from Norwich Union and the Department for Transport.

Motorway driving, meanwhile, is up to 10 times safer than driving on low-speed urban roads.

The new insurance will cost from 1p per mile for off-peak motorway driving and from 4p per mile for off-peak urban driving.

Norwich Union has also launched a "pay as you drive" policy specifically for young drivers.

Those aged 18 to 23 will be charged lower premiums if they stay off the roads at night.

The cover will cost one pound per mile for journeys made during the hours of 11:00 p.m. and 6:00 a.m., but as little as 5p per mile for off-peak travel. Young motorists will also receive 100 or more "free" off-peak miles per month.

Young drivers account for 45 per cent of fatalities on the road between 11:00 pm and 6:00 a.m. and are 10 times more likely to have an accident at night, rising to 14 times more likely on weekend nights, according to industry statistics.

Kay Martin, head of the new insurance at Norwich Union, said the policy provided an "innovative solution" for young drivers.

"The future of insurance is tailored products to suit people's lifestyle and the launch of 'pay as you drive' insurance is the first step in this direction," she added.