A pay-as-you-drive car insurance policy for younger drivers has been launched by Norwich Union.
An in-car "black box" style device calculates premiums based on when and how often the car is used.
The scheme is open to 18 to 21-year-olds and, as with mobile phone tariffs, drivers will pay more during "peak" times, between 11pm and 6am.
There is a one-off fee of £199 for the box, but Norwich says that this amounts to less than savings made on premiums.
"The scheme brings motor insurance into the 21st century by providing affordable comprehensive insurance for young drivers in return for driving at safer times," said Robert Ledger, programme director. Pay-as-you-go generation
The policy works in a similar way to mobile phone tariffs.
Users pay a monthly fee for cover against fire and theft, and also a personalised rate for off-peak travel, which starts at 6p a mile.
Travel during peak times costs a flat rate £1 per mile.
The first 100 off-peak miles each month under the policy, known officially as "Pay-as-you-drive" will be free, Norwich Union said.
The insurer calculates that younger drivers could save up to 30% a year off the cost of their premiums.
"The concept closely follows the approach used by mobile phone companies," Mr Ledger told the BBC News
"The standing charge is very similar to line rental and having a peak and off-peak tariff is very similar to the approach on mobile phone charging. We have done it in that way because of the group of customers we are targeting"
The launch of the scheme for younger drivers is part of a wider initiative being developed by the insurer. In August, it launched a two-year pilot scheme to investigate driving patterns for the development of pay-as-you-drive pricing.
The insurer says it has been able to launch a scheme for younger drivers prematurely because it already knows that time of day is a major factor for younger drivers.
It said the higher tariff for hours between 11pm and 6am reflected accident statistics for 18 to 21-year-olds.
Young people are at a much greater risk of being killed or seriously injured in car accidents between 11pm and 6am. HOW IT WORKS
A "black box" style device is fitted to the car
It uses Global Positioning Satellite (GPS) technology to record the journeys of the car
This information is then transmitted securely to Norwich Union via a mobile phone network Thousands of motorists are road-testing a new pay-as-you-drive insurance scheme.
Up to 5,000 Norwich Union policyholders are having their cars fitted with a "black box" which tracks every completed journey they make.
The technology, similar to that used in mobile phones, will allow the insurer to bill motorists for each mile driven.
The two-year pilot scheme could help cut premiums for occasional car users, but may mean more expensive car insurance for high-mileage drivers. Recorder
The black box is smaller in size than a DVD case and is installed either in the boot or passenger area of a policyholder's car.
The box records real-time vehicle usage and sends the data to Norwich Union securely using mobile technology.
A monthly insurance bill will then be sent to the policyholder based on an agreed insurance cost per mile.
The cost per mile will be based on a number of factors - such as insurance History
, the age and sex of the policyholder as well as how the vehicle is being used.
"The interest in the pilot scheme has been phenomenal," Robert Ledger, director of the pay-as-you-drive scheme, told BBC News
"We could have filled the pilot twice over with the amount of requests we've had from interested motorists, not just within the UK but from drivers around the world."
Progressive Insurance, the USA's fourth largest car insurer, has already piloted a pay-as-you-drive scheme across the Atlantic.
Norwich Union, the UK's largest car insurer, has exclusive rights to market the technology in UK and Europe.
If the pilot is successful the technology may become available to other Norwich Union customers.Volunteer
Linda Jones, 45, from Chichester, a registered childminder, believes she will save on her £300 annual car insurance premium by being a pay-as-you-drive pilot volunteer.
"I only cover 6,000 miles a year, with a lot of short journeys, but with several children to ferry about my car is essential," Ms Jones told BBC News
"Pay-as-you-drive seems such a good idea for a low-mileage driver like me."
However, Ms Jones acknowledged that paying for car insurance by the mile may not be right for everyone.
"My two eldest children drive cars and cover a large number of miles each year. They are not keen on the idea of a pay-as-you-drive scheme," she said.