MoneySuperMarket data showing the average quoted savings for drivers aged 17 to 24 when they take out a telematics policy, between January and March 2018.
What is telematics/black box car insurance?
Also known as black box car insurance, telematics policies use your own driving data – where, when and how you drive – to potentially help bring down the cost of your car insurance.
When you sign up for a black box car insurance policy, a ‘black box’ is installed inside your car. This measures various aspects of your driving and shares that data with your insurer, who can alter your premium price day by day.
When you have a telematics policy, you can see the ‘scores’ you are getting as your driving is monitored, allowing you to make adjustments to improve your performance.
If you can demonstrate that you are a safe driver, your insurance premium will reduce. However, if you drive erratically then your premium could go up as you are deemed 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 as much as 25% for safe drivers. According to our data, the average 17 to 24-year-old driver could save £363.25* with telematics insurance.
Telematics insurance is different
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 additionally consider your driving behaviour.
Unlike a standard car insurance policy, a telematics policy requires the installation of a black box device in your vehicle. The insurer can then look at the length of 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 be changed monthly or quarterly, or even when your policy comes up for renewal, dependent on who insures your car.
Black box car insurance premiums are tailored to you
Everything, from the time of day and which roads you use to your own particular driving style, have 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.
But 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?
Motorists with driving convictions, who can often pay sky-high premiums, may 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 £200* more expensive than a standard policy, perhaps due to no claims discount, among other factors.
Choosing a black box car insurance policy is one way to reduce your premium if you are in a high risk group, such as:
- Inexperienced drivers.
- Less frequent drivers with a low annual mileage.
- Young drivers under 25 years of age.
- Drivers with a criminal conviction or driving conviction.
MoneySuperMarket data showing which car makes and car models are covered most often by telematics policies, based on the percentage of quotes run between January and March 2018.
What are the restrictions and what are the myths?
If you are a young or inexperienced driver, a telematics premium could save you money, but you need to also consider the potential disadvantages. Some telematics insurance policies impose restrictions on when and where you can use your car, for example ‘banning’ or charging more for night-time driving.
Another consideration is privacy. You should always read carefully the firm’s commitment to the use of personal data, and now with new GDPR rules coming into effect, this may become more relevant. However, privacy concerns might be exaggerated slightly. Insurers already have a lot of data that relates to you, and the data used is abstracted rather than specific, so they can’t actually follow any actual ‘routes’ you may drive.
You should consider if the telematics insurance company charges for the black box and its installation – and what happens if this is damaged or if you choose to cancel the policy – because you might not want to stay with the same insurer over time.
One of the big problems for insurers that provide black box insurance, is that any ‘bad driving’ records don’t follow the driver. This means that any drivers who may be charged more as a result of their driving can switch to a new provider on renewal and you will start 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 could also help track down your vehicle if it is stolen, or assist in managing a claim after an accident. Because the black box is not owned by you and cannot be tampered with, it can often serve as an independent, objective witness to the events leading up to the crash.
If you were driving erratically then it would indicate fault on your part, or conversely if you were driving safely then they might look more closely at the other driver.
Installing the black box
If you take out a telematics insurance policy, the 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 often attached to your dashboard.
In addition to monitoring when you drive, the black box 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.
Seeing your telematics data
The data collected isn’t just for the insurer, but for the driver too, as it can help your improve your driving style. Depending on who covers your telematics insurance, you can either download an app to your mobile device or you can check on a secure website to learn about your driving habits.
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 each quarter, but could be monthly depending on who you choose to supply your telematics cover. This driving score will tell you what you can save the next quarter, and give you a rundown of how you drive and if you need to improve any aspects of it.
For example, if you are braking harshly or cornering badly, this normally means you are driving erratically and more likely to have crash – so needs improvement or your premium will increase at the next review.
But, please remember to never use your phone to make calls or 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 give you an annual mileage allowance (say, 5,000 miles) and then award bonus miles to careful drivers, for example. Miles could also be deducted from the allowance 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.
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.
*All MoneySuperMarket data relates to quotes run between January and March 2018.