Motorists can slash their insurance premiums by fitting their vehicles with black boxes that “spy” on their driving habits.

More Than is today launching a policy, Drive Time, that claims to cut the cost of insurance for younger drivers by 40%.

The policy, which is available to motorists aged 18 to 25, uses black-box technology to track when they use their cars. If they do not drive between 11pm and 6am, they qualify for the 40% discount. Statistics show most accidents happen during these hours and it is younger drivers who are often at the wheel.

Norwich Union also announced last week that it plans to extend its “pay as you drive” scheme, which uses similar black-box technology. At present, the scheme is a pilot involving 1,500 drivers aged 18 to 23. The less they drive, the lower their premiums. The insurer wants to expand the scheme to all drivers and hopes to have 100,000 users by the end of the year.

Anyone who signs up for Drive Time will get a 40% discount on the standard premium and then have a small black box installed in their car by More Than engineers. This will send a signal each time the engine is started and stopped so the insurer can monitor when the car is being driven.

A 19-year-old woman who has only just passed her test and drives a Ford Fiesta in Birmingham would pay £2,770 a year with Direct Line and £2,498 with Churchill, according to a mystery shopping exercise by More Than. She would pay £1,700 under More Than’s standard policy, but only £1,020 with Drive Time.

A 21-year-old man from Croydon in south London, who drives a Peugeot 206 and has two years’ no-claims discount would pay £1,327 with First Alternative, £910 with Direct Line and £605 with Churchill. With Drive Time, he could cut his annual premium to £484. More Than’s standard premium would be £807.

If you take the 40% discount and then find you need to drive after 11pm or before 6am, you will be charged £25 every time you use the car at those times.

Richard Mason at Insuresupermarket.com, a price comparison site, said: “For too long, level-headed young motorists have had to subsidise those who take more risks on the road. Drive Time’s ‘curfew’ approach takes one positive step towards tackling this issue and we expect other insurers to launch their own innovative takes on this new technology in due course.”

Norwich Union’s “pay as you drive” scheme works in a slightly different way, with premiums based on how often you use your car as well as the time of day. Customers are charged a basic monthly premium and then pay according to their mileage on top.

Like Drive Time, the most expensive period is between 11pm and 6am. Norwich Union charges £1 per mile during these hours. If you drive at other times it costs from 6p a mile, although this depends on your age, gender and the vehicle you drive. Customers receive 100 free off-peak miles each month.

Your premium varies every month, but Norwich Union can give an illustrative premium at the outset based on information you provide about your driving habits. This allows you to compare quotes before signing up.

There are other ways young drivers can cut the cost of motor insurance. Many parents add their son or daughter to their insurance policy as a named driver. This will bump up the cost slightly for the parent but it often works out much cheaper than a stand-alone policy.

And most insurers also offer discounts, typically 35%, to drivers who have taken the Pass Plus — an advanced training course you can go on within 12 months of passing your test.

Finally, always get quotes from several insurers. Even if a certain insurer is cheapest for a friend, it may not offer you the most competitive quote.

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