What is telematics car insurance?
Also known as ‘black box car insurance’, telematics policies use your own driving data – where, when and how you drive – to affect the price of your car insurance.
When you sign up for a telematics car insurance policy, a so-called ‘black box’ is installed inside your car. This measures various aspects of your driving and shares that data with your insurer, which can then alter your premium price day by day.
When you have a telematics policy, you can see how well you are driving as it is monitored in real time, allowing you to make adjustments to improve your performance.
According to MoneySuperMarket data correct as of March 2019
If you can demonstrate that you are a safe driver, your insurance premium should fall. However, if you drive erratically, your premium could go up as you are deemed as more at risk of making a claim.
Telematics cuts the cost of cover for young drivers
Telematics insurance companies claim they can cut the average car insurance premium for young drivers by a significant amount. According to the most recent MoneySuperMarket data, the average 17- to 24-year-old driver could save £151.25 with telematics insurance.
Car insurance is based on risk, and insurers look at a number of factors before setting your premium. These include your age, where you live, your occupation, and the make and model of the car you drive. However, telematics policies also consider your driving behaviour.
Unlike a standard car insurance policy, a telematics policy requires you to install a black box device in your vehicle. An insurer can examine the length of the journeys you take, the types of road you tend to use, what time you’re usually on the road and how smoothly you drive.
Your telematics policy will initially cost around the same as a normal policy, but as the insurer collects and monitors the data from your car it can start to adjust your premium. This adjustment can happen monthly, quarterly or when your policy comes up for renewal, depending on who insures your car.
Black box car insurance premiums are tailored to you
Under a telematics policy, everything from which roads you use to your own particular driving style has an impact on your driving record and, in turn, your premium.
For example, car accidents are much more likely at night and at rush hour, and even certain roads can be shown to be more dangerous – such as rural lanes.
With a telematics policy your insurer can track your time on the road and adjust your premiums to more accurately reflect the risk of a claim.
Who is black box insurance for?
Younger drivers and new drivers are prime candidates for telematics insurance. Motorists with driving convictions, who can often pay sky-high premiums, may also benefit from this type of policy. Telematics car insurance can also work to your advantage if you are a careful driver who rarely gets behind the wheel.
But it’s worth noting that it does not represent value for older drivers as it begins to get more expensive than a standard car insurance policy after the age of 25. The average telematics policy for someone in the 40 to 49 age group, for example, will be £173 more expensive than a standard policy, perhaps due to no-claims discount among other factors.
A black box car insurance policy is one way to reduce your premium if you are in a high-risk group:
- Inexperienced drivers
- Infrequent drivers with a low annual mileage
- Young drivers under 25 years of age
- Drivers with a criminal conviction or driving conviction
The car models most likely to be covered with a telematics insurance policy, according to MoneySuperMarket data correct as of March 2019
One of the big problems for insurers which provide black-box insurance is that records of bad driving don’t follow the driver between insurers. This means that drivers expecting increased premiums from their poor driving can switch to a new provider on renewal, starting afresh with no black marks – which could mean a big reduction in cost for younger drivers.
If you have an accident with black box insurance
Fans of telematics argue that it actively encourages safer driving, as you get cheaper insurance over time if you drive competently, which of course inspires you to keep driving safely.
However, the technology can also help track down your vehicle if it is stolen, or assist in managing a claim after an accident. Because you don’t own the black box and it cannot be tampered with, it can serve as an independent, objective witness to the events leading up to a crash.
If you were shown to be driving erratically, fault would be indicated on your part, and safe driving might conversely see the other driver looked at more closely.
Installing the black box
If you take out a telematics insurance policy, your insurer will either fit a black box to your car itself or send it to you through the post with instructions on how to install it. The black box is no bigger than a smartphone and is usually attached to your dashboard.
In addition to monitoring when you drive, the black box also records how you handle the car – taking into account acceleration, braking, cornering and so on. This means that the telematics insurance provider will know whether you drive in rush hour, at high speed and whether you brake harshly and frequently.
Seeing your telematics data
The data isn’t collected just for the insurer but for the driver too, and it can help you improve your driving. Depending on which firm provides your telematics insurance, you can either learn about your driving habits via a mobile app or at a secure website.
The insurer should also send you tips to improve your driving based on how you drive, direct to the app or website.
You should receive a ‘driving score’, which will directly influence your premium every month or quarter. This score will tell you what you can save during the next assessment period, and give you a rundown of how you drive.
Please remember never to use your phone to make calls, send texts or perform any other functions – like checking your telematics app for your score – while you are driving!
Choosing a black box insurance policy
Unsurprisingly, more and more insurers are offering telematics car insurance policies, and you can compare the premiums using MoneySuperMarket’s free independent comparison service to make sure you get the best deal.
While most telematics car insurance providers use similar technology, the policies might work slightly differently so it’s important to compare the details of each offering.
Some will offer an annual mileage allowance (say, 5,000 miles) and award bonus miles to careful drivers, for example. Miles may also be deducted from the allowance for activities perceived as more risky, including driving at rush hour or at night. This data is then used to decide renewal premiums, with discounts for the safest motorists.
Alternatively, you can pay for cover by the mile – and the price varies according to the time of the day or night that you take the car on the road.
Always compare different telematics policies to get the best deal for you, ensuring you know exactly what you are going to get from the provider, how you will be charged, and if you can take the black box with you or not.