Will telematics (black box) reduce my car insurance premium?

Car insurance is a major outgoing and so all drivers will want to make sure they have considered any way of saving money. Telematics can lead to a reduction in cost but is not a choice for everyone. Read on for answers to commonly asked questions about the money-saving potential of a telematics device and for lots of information to help you to decide if black box insurance could be a good choice for you.

How will a telematics device reduce my insurance price?

You will find that your black box insurance quotes can be substantially lower than standard insurance and this is because you will be allowing your insurer to monitor how you drive.

As explained on the the Association of British Insurers (ABI) website [1], these devices usually use GPS technology to allow insurers to better assess risk and charge customers accordingly.

There are instances where this might not be the most cost-effective option, as you will discover by reading through this telematics guide.

What is a telematics box?

A telematics box, otherwise known as a black box, is a GPS tracking device. This small box is installed in your vehicle and monitors how well – or badly – you drive.

The box allows your insurer to give you a driving score based on factors such as speed, braking and steering, and can lead to a reduction in your insurance premiums if you can demonstrate that you are a consistently safe driver.

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Telematics boxes aren’t the only kind of device used by insurers and drivers, however, as you will find out next.

Are there different types of money-saving telematics devices?

Telematics insurance is commonly called black box insurance but there are different types of telematics devices. These include:

• Black boxes – These are the most common and are usually installed for free. Some insurers will arrange for this to be done. Others will allow you to do it yourself.
• Plug-in devices – Some insurers choose to send you a small telematics device that you just plug into your car’s cigarette lighter socket. Your insurer will be able to tell you if your vehicle is compatible with this kind of device and how you use it.
• Smartphone apps – When you opt for telematics insurance you will need to download the relevant app. This will track your driving and provide your insurance with the information required. Some insurers use smartphone sensors to gather information.

What information do telematics devices gather?

Telematics devices can gather a wide range of facts about your driving, including:

• Your braking habits
• Your usual speeds
• When you drive
• How regularly you take a break when you drive long distances.
• How far you drive

The exact information that is gathered and recorded will depend on your chosen insurer but you should be told what this will be before you sign up for the policy.

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How does your driving score affect the cost of telematics insurance?

The score which your insurer gives you for your driving – which should be passed on to you via your insurance account or your policy app – will directly affect how much you will have to pay for your insurance policy.

Is cheaper black box insurance just as good as standard insurance?

Telematics insurance is a new kind of car insurance compared to other policies but that does not mean there is anything less trustworthy about the products on offer.

In fact, there are many benefits to this type of insurance. As well as reducing costs, it can also encourage you to focus on how you drive and improve – or maintain – your skills.

Are there other benefits of black box insurance?

One of the other major benefits of this type of insurance is that it will usually include an anti-theft tracker. This means that the police could track your vehicle if it is stolen. You will normally also get impact alerts, which are recorded if you are involved in a crash. This can alert emergency services.

Is black box insurance a good choice for younger drivers?

Black box insurance for young drivers can significantly reduce how much you have to pay. In fact, for some people telematics insurance implications can be so great that they determine whether or not the expense of running a car is affordable.

Statistically, young drivers are more likely to have an accident. In fact, research shows that 1 in 5 young drivers will be involved in a crash within 12 months of passing their test [2] and this is why they will typically be charged more for insurance. This means that any means of reducing the cost can be very popular.

It is worth remembering, however, that telematics record your driving and could just as easily lead to you being penalized for bad driving as rewarded for good driving. In other words, if the device shows that you are not a safe driver, your insurance premiums could go up.

Why was cheaper black box insurance invented?

This type of car insurance was originally designed specifically for younger drivers as a way of monitoring their driving skills and helping them to reduce their insurance premiums.

It has risen in popularity and figures from GlobalData show that Telematic device uptake went up 28.6 per cent from 2020 to 2021 in the under 30s age range [3].

Can anyone get young driver black box insurance?

Young driver black box insurance was developed for newer and younger drivers but its appeal does not end there. It is available to anyone, regardless of age but sometimes dependent on you meeting other criteria.

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What are some of the black box insurance rules?

There are typically black box insurance rules that can influence how much you will pay for your telematics insurance. For example, you may pay more for your policy if your black box shows that you normally drive at night. This is because statistically, more accidents happen at night than during the day. The same may be true if you normally drive in rush-hour traffic.

You may also pay more if you normally drive on motorways or busy roads, if you are likely to go over the speed limit, or if you drive more.

Other rules may also apply to who can get black box insurance. Most people should be able to get it but what’s on offer does depend on the providers. Some insurers will not offer this type of insurance to drivers over 25, for example. You could also be rejected if you have points on your driving license or if you have a significant claims history.

Are there rules about my driving if I have black box insurance?

Some insurers will limit when and where you can drive your vehicle and some policies will apply a charge if you don’t stick to set driving hours. This is why it is important to carry out a black box insurance comparison to make sure that you get a policy that actually meets your needs.

How much will I pay for telematics insurance?

This will depend on a range of factors, including how you use your car, what type of vehicle you drive, your profession and your age, as well as your driving skills.

Do you need a black box insurance comparison?

A telematics insurance comparison will always be useful to check that you are not paying more than you have to for your black box insurance. It allows you to compare like-for-like products in the quickest, easiest, and most efficient way possible.

Is telematics insurance always cheaper?

In almost all cases, this type of insurance is a cheaper option. The exception to this may apply to drivers aged 50 or over who may find other more cost-effective options.

It is also worth noting that black box insurance might not be the cheapest option if you are classed as being a higher risk driver, such as if you drive long distances or mostly travel at night.

How to get cheaper telematics insurance?

Driving safely will obviously impact on the cost of your insurance. You can also reduce the price by paying annually rather than monthly, keeping your car safe, sticking to driving guidelines set by your insurer, increasing your excess, and driving fewer miles. It is important to compare policies.

What if I want to complain about my telematics car insurance?

Many people in this country now hold telematics-based insurance policies. According to the most recent data from the British Insurance Brokers’ Association (BIBA), there were almost a million telematics car insurance policies taken out in the UK in 2017 [4]. Most users will enjoy their benefits without a hitch. If you do experience issues, help is at hand.

In the first instance, you should contact your insurer but if you need to take matters further, you can contact the Financial Ombudsman Service via www.financial-ombudsman.org.uk.

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References

• [1] www.abi.org.uk
• [2] www.brake.org.uk
• [3] www.insurancetimes.co.uk
• [4] www.insurancejournal.com