Overcoming high car insurance prices
The cost of car insurance can take a big bite out of a motorist’s budget. Young drivers pay a particularly high price for car insurance because they are more likely to be involved in an accident and so more likely to claim on their insurance policy.
Premiums for young motorists can soar into the thousands, often making it unaffordable to run a car. One way potential way of getting around this is telematics car insurance.
Telematics insurance
It’s perhaps no surprise that telematics car insurance policies are gaining in popularity.
Telematics insurance, sometimes known as black box insurance, harnesses modern technology to try to bring down the cost of car insurance. You might not notice much difference in the cost during the first year, but the savings should then start to come through.
Tracking device
If you take out a telematics insurance policy, the insurer will fit a black box to your car – usually at no charge. The black box is no bigger than a smartphone and is often attached to your dashboard.
In addition to monitoring where and when you drive, it also records how you handle the car – 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.
Monitor your driving habits
It sounds a bit sinister, but telematics insurance can lead to cheaper premiums.
Let’s say you take out a standard car insurance policy. The insurer will look at a number of risk factors before it sets your premium, including your age, occupation and make and model of the car. But it does not take into account your driving habits. For example, it will not know that you avoid motorways and never drive at night.
Adjusted premiums
But the time of day that you drive - and your driving methods – can have a big impact on your driving record. For example, accidents are much more likely at night and in rush hour, for obvious reasons. If your insurer can track your time on the road, it can therefore adjust your premiums to more accurately reflect the risk of a claim.
Price per mile
Telematics car insurance providers all use similar technology, but the policies work slightly differently.
Some cover a certain number of miles and then award bonus miles to careful drivers. Miles are also deducted for a number of risky activities including driving at rush hour or at night. The data is then used to decide renewal premiums, with discounts for the safest motorists. Or, 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.
Cut the cost of cover
Telematics insurance companies reckon they can cut the average car insurance premium by about 25%.
Fans of the black box argue that it encourages safer driving
But some motorists can benefit from much bigger savings. Young drivers stand to gain from a telematics car insurance policy, as do motorists with convictions, who can often pay sky-high premiums. Telematics car insurance can also work to your advantage if you are a careful driver who rarely gets behind the wheel.
Safer driving
There are other advantages to telematics car insurance. Fans of the black box argue that it encourages safer driving. The technology can also help to track down your vehicle if it is stolen and assist in managing a claim after an accident (it can often serve as an independent, objective witness to the events leading up to the crash).
Road restrictions
But there are disadvantages, too. Telematics insurance policies often impose restrictions on when and where you can use the car, banning night time driving, for example.
Privacy is another issue. You should always read carefully the firm’s commitment to the use of personal data.
Check also if the telematics insurance company charges for the black box and its installation – and what happens if you choose to cancel the policy.
Compare telematics insurance premiums
Some experts reckon that telematics insurance will soon become the norm – interest is certainly high among young drivers in particular.
Not surprisingly, more insurers are coming out with telematics car insurance, and you can compare premiums using MoneySuperMarket’s free independent comparison site to make sure you get the best deal.