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Telematics car insurance is when your insurance provider monitors your driving habits and adjusts your car insurance premiums based on how you drive. They’ll monitor your driving through a black box installed in your car, a plug-and-drive device or a mobile phone app.
Your provider will be able to track things like your driving speed, how you brake and how you handle corners. The more responsibly you drive, the lower your premiums are likely to be in the future. You’ll also be able to see your own driver score, either on the insurer’s website or smartphone app.
Telematics insurance policies offer certain benefits you won’t get with other types of cover, such as:
Improved driving skill
Telematics insurance can help anyone get better at driving – young or old – by providing feedback on where you can improve while taking corners or braking
Reassurance for parents
Help for convicted drivers
Older drivers with a history of convictions can also take advantage of telematics, as it can lower the cost of cover made more expensive by past infractions
The most recognised form of telematics cover, black-box insurance is when a monitoring device is installed in your car
You can also install an app on your phone that uses GPS to monitor your driving habits and activity
Some insurers offer to send you a device you can plug directly into your car yourself
Telematics cover might not immediately be cheaper than a standard car insurance policy, but if you drive safely and sensibly, your insurer may give you a discount on premiums in return. Other factors such as when you drive and how many miles you cover also have an impact, so avoiding rush hour and curfew times may also result in savings.
Telematics insurance providers collect and analyse data about your driving in different ways, so it’s worth checking how your insurer calculates your driving score.
What is pay-as-you-go car insurance?
Pay-as-you-go car insurance adjusts your premiums based on how you drive. Pay-per-mile and pay-per-hour premiums are based on how much you drive, either by mileage or time on the road, but telematics insurance also factors in when and how well you drive.
*Based on drivers aged under 25 holding a full UK driving licence, taking out car insurance between January and July 2020. Data collected by MoneySuperMarket, accurate as of August 2020.
As these are generally the cheapest available
To reduce the risk of it being stolen or vandalised
Rather than spreading it over monthly instalments
To indicate that you’ll only claim when it’s really necessary
As certain makes and models are safer and less likely to be involved in an accident
As the longer you wait til your current policy ends the more you’ll end up paying for cover when you renew
"Telematics policies can provide feedback on your driving and help you become a safer driver. They can also be cheaper than traditional insurance policies, particularly for younger drivers. The more responsibly you drive, the lower your premiums are likely to be in the future."
- Dave Merrick, head of car insurance
The way your device will be installed depends on the type of device you’re using – a black box is usually installed by a professional at the arrangement of your insurer. If you chose a plug-and-drive device it will be sent to your address, and you’ll just need to plug it into your car’s charging port or cigarette lighter.
If you opt for an app you’ll just need to download and install it and it will track your driving automatically through GPS.
The cost of installation if you get a black-box is often, but not always, taken care of by your insurer. However there are also some other fees or charges you should be aware of, including:
It will depend on the type of telematics insurance you have in place, but if you’ve got a black box installed anyone else who drives your car will affect your driver score. If you’ve got telematics through an app or a plug-and-drive device this won’t be the case, as you should be able to control when your driving is monitored.
If someone else is driving your car, or you’re driving someone else’s, the driver must have an adequate level of car insurance in place – whether it’s their own policy or as a named driver on the main driver’s policy.
Depending on the provider and type of telematics device you have, it may be able to detect if you’re involved in a road accident – usually by measuring force of impact. The device can send your location to the emergency services, and the data provided may even be able to help insurers determine what caused the accident and whether you were at fault.
Technology can come to the rescue of 17-year-old drivers in the form of black-box insurance. With this kind of policy, a tracking device is fitted to your car and records when, where and how you drive – and it can have a big impact on the cost of car insurance for 17-year-olds.
A number of insurers now offer so called telematics policies and it’s a good idea to compare prices as you may be able to save money.
If you have a plug-and-drive device or you use an app, changing car shouldn’t be a huge hassle, but if you have a black box installed it’s somewhat trickier. Your insurer will arrange the installation of a new box in your new car and the old box will be deactivated – this may be for no cost, but some providers charge up to £150 for the service.
As with any insurance policy you’ll be able to cancel when you want to, but you may face an early cancellation fee if you do so before the policy term is finished. If you do choose to cancel, your insurer will deactivate your monitoring device so you won’t send any more driving data.
If you have a black box you can choose whether you want it removed or not, though as mentioned above this may cost up to £150.
If your policy ends and you want to change providers, your current insurer will deactivate your account and device so they won’t receive any more data. If you have a black box and you want it removed, you might have to pay the removal fee.
If you’re driving abroad you should still be covered by your policy, though you’ll need to check with your insurer whether your driving is still assessed.
Your insurer will keep your driving data safe and secure, generally just using it to monitor your driving habits and checking any claims you make or someone else makes against you. They may also share it with their business partners, but they won’t sell it.
For youngsters getting their first taste of independence, you might be worried about your insurer sharing information about your whereabouts with your parents. Generally this won’t be the case – any data your insurer does keep will be available to view on your customer portal online or in the app, and only the policy holder will have access to this.
Keep in mind that if you’re involved in a road accident your insurer may share data about your location with the authorities and any emergency contacts if you have one.
If your telematics device is a black box, they’re usually self-contained so they shouldn’t have any effect on your car. The same should go for an app on your mobile phone, however plug-and-drive devices that plug into your car’s charger or cigarette lighter might take up some of your car’s battery power.
Historically telematics insurance policies implemented a curfew to prevent people driving during later hours, with fines for people who broke the curfew – but these aren’t as common as they were. There might still be penalties for driving after certain hours however, namely increased premiums or a negatively impacted driving score.
Breaking traffic laws while driving a car with telematics installed will negatively affect your driving score, however insurers generally won’t immediately share this with authorities. However the police can request access to driver data by going through the courts, while insurers can also share if you give permission for them to do so.
Your telematics device won’t interfere with your car at all – this means it won’t control the radio, lights, wipers or heating.
Current devices don’t record audio in your car – only specific information about your driving such as speed and acceleration, how you take corners and the number of miles you drive.
Telematics devices can’t disable your car, and while many used to have curfews these are becoming less common. Driving during later hours can sometimes affect your premiums – it’s best to check with your insurer for their rules on night drives.
You won’t be restricted in how many miles you can drive in your car, but you will have to give an estimated mileage when you take out the policy – and the fewer miles you drive the less you’ll pay. However, if you do go over this estimate you might end up paying more in premiums.
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