Telematics car insurance has been around for about a decade and since then it has become an increasingly popular insurance option. In fact, there are now about 850,000 black box policy holders in the UK. With insurance premiums going up in general, it's looking like more drivers could be making the switch to telematics-based policies.
But how do they work and should you consider them? And could telematics really help reduce your insurance premium?
A telematics car insurance policy involves having a small telematics box (known as a black box) about the size of a matchbox fitted to your car. This device measures different aspects of your driving to see how safe you are on the road. The information it gathers is then used by your insurer to help determine your future premium (how much you pay).
By constantly monitoring your driving behaviour, a telematics box builds up a much more accurate, personalised view of your profile as a driver. Rather than assess you based on general demographic information, including age and number of years driving, telematics car insurance providers eventually issue you a premium quote based on how you drive as an individual.
Some providers may offer a slightly reduced premium simply because you've agreed to have a black box fitted. This is because they assume it will make you a safer driver.
With other providers, you may have to wait a while before you can reap the rewards of your black box. When you first take out the policy there isn't any driving behaviour to judge. This means your premium will be decided in the same way as any other car insurance policy. But once the insurer has a better idea of how you drive, they'll be able to adjust how much you pay, either mid-way through your policy or when you come to renew.
To help get a picture of how you drive the black box tends to measure a number of different data points, which can vary depending on the provider. Here are some of the most common ones:
- Your speed
- Distance travelled
- Your driving style, including how you manage corners, acceleration and braking
- The time of day or night you drive
- The type of road you drive on, including country, inner city or motorways
This depends largely on what type of driver you are.
Fully comprehensive insurance policies with a box generally do come with lower premiums than their non-telematics counterparts. Especially if you're in a demographic that tends to get offered high insurance prices (young drivers for example).
If you are a careful driver that tends not to drive during riskier times of the day, chances are that you'll pay a lower premium. If this doesn't come as naturally, having a telematics box could help encourage safer driving, and so still help reduce your premiums. In fact, many policy providers now offer the added benefit of letting you track your own driving online so you can see how you could improve your driving habits.
But any sort of 'irresponsible' driving or driving safely but during typically riskier times, might mean you're left actually paying more than usual.
Telematics-based policies can often help to bring down your premium. But if you fit one of these, then you may be in a better position to benefit from a black box.
1. If you're a young driver
Young drivers are statistically more likely to be involved in accidents than other age groups, which is why young driver premiums on normal policies can be sky-high. With a black box your insurer will also consider how you drive, rather than just how old you are.
2. If you're a newly qualified driver
Just got your licence? Like young drivers, newly qualified drivers are statistically proven to be more likely be involved in a car accident. This means you’ll be paying a higher premium on a regular policy.
3. If you pride yourself on being a careful driver
Driving more slowly, taking greater care when approaching corners and keeping safety front of mind in general could help reduce your premium. Some telematics-based providers review your profile periodically, such as every three months, and they may apply a discount if you've shown yourself to be a particularly safe driver.
4. If you only tend to cover low mileages
Most black box policies let you choose how many miles you'll be driving and then they'll use this information to decide how much to charge. Most providers prefer lower distances as it reduces the risk of an accident. If you tend to really rack up the miles then a black box may not work for you. In fact, some policies may impose a fine if you exceed your mileage. (Most policies do let you purchase 'top-up' miles so be sure to check). If you're a low mileage driver then your premium will usually be cheaper anyway, but getting a telematics-based policy can help to bring your premium down even further than normal. Plus, if the limited amount you are driving is on safe roads then you could benefit from an even bigger discount.
5. If you're more of a daytime driver
Driving in the night is considered more risky, so if you drive around late at night with a black box, it could push premiums up. Some policies even have curfews and will fine you if you drive around after the curfew. But if you drive more or exclusively during the day, it could stand you in good stead with a telematics-based policy.
Like most insurance policies there are some fees to be aware of. These vary greatly between providers, so make sure you're shopping around and reading the conditions of your policy before you sign. Here are some of the extra costs you may encounter:
- Getting your box removed
If you remove the box yourself then you'll be in with a hefty fine. Even when the policy ends, if you decide to cancel your policy many insurers will simply disconnect your device remotely. If you want it physically removed you may occasionally have to pay.
- Missing your installation
If you opt to get a black box, you'll need to book a slot to get the box fitted. If you miss it, you could be charged, so make a note in your diary.
There are many telematics car insurance providers to choose from. Some of the most popular providers include: DirectLine's Drive Plus, Admiral's Little Box, Bell, Hastings' Direct Smart Miles and Ingenie.
Each telematics policy premium may offer different conditions. Some have no curfews or fines, whereas others might. The price of one premium could be based more on your mileage, whereas another could be on your driving behaviour. As well as comparing telematics with non-telematics providers, it also makes sense to shop around all the different telematics policies on offer.