What is black box insurance?

January 15th, 2015
What is black box insurance?

Telematics car insurance, A.K.A black box insurance; monitors and records driving behaviour, and rewarding motorists who are careful with smaller premiums.

It also requires that black box is installed in your vehicle that uses satellite technology to assess acceleration, speed, cornering, braking and the times in the day journeys are made. Some black box insurance covers also enforce a curfew whereby and additional premium is charged is the vehicle is driven during dangerous night-time hours.

The details are sent to the insurer via GPS and the firm will be able to tell the chance that a driver will make a claim.

This enables insurance firms to provide discounts to those who provide evidence of careful driving, and increase premiums for those regularly driving poorly. Safe motorists will on average save up to a third – and even more in some incidents.

Driver IQ, a website that provides an array of online tools created to assist young drivers, believes 25% of car insurance covers will be based on telematics by 2020, whilst Brokers’ Association (Biba) feels that sales have risen for black box insurance policies by five times in the past two years and the expectancy is that it will reach 500,000 in the coming two years.

What are the advantages?

Black box car insurance covers can be really beneficial for young motorists who could find it difficult compared to experienced motorists to get cover which is affordable – and in some situations, to gain any cover at all. This is due to insurance firms calculating policy expenses depending on statistical risk, with a vast number of insurance companies feeling young drivers are very great a risk according to the accident statistics.

The numbers identified by the Association of British Insurers (ABI) highlights motorists between 17 and 24 are thrice as likely than any other road user to be responsible for “catastrophic claims”.

Since the technology runs by recording motorists tendencies, premiums can be matched exactly to a motorists profile. This results in careful young drivers who pay lower amounts for their cover – although you could be waiting a year to profit.

Black box insurance cover allows young drivers to escape the first one-off fee paid for standard cover. While there could be a deposit to cover the cost of the black box, this will not come close to conventional fees.

For a young driver, telematics technology also offers more control on the amount you must pay to cover your car across the year, since through limiting your mileage you can help maintain lower costs. Crucially, even if you choose to get the black box insurance, it is still likely to gain a one-year no-claims discount. Doing so, the savings can be used to assist in affordable conventional car insurance in the subsequent year.

Black box insurance could also profit other types of drivers who drive a smaller number of miles annually, like experienced older motorists, along with careful drivers who regularly keep away from driving in peak hours or late night. Similarly, if you have made a car insurance claim before, you could in addition profit from opting for a black box insurance policy.

How else can black box insurance help?

Along with rewarding safe drivers with smaller premiums, black box technology could benefit in other ways. Insurance firms may begin using telemetry recorded by black boxes to identify where the blame lies when accidents occur. This, in addition, may assist in reducing fraudulent claims.

The black box for cars, offered as an ensemble of the cover, may prove to be beneficial if a car is stolen, as the authorities can locate the vehicle from the box.

Telematics technology is a safe and appropriate idea for the modern driver, and there are significant predictions that this may turn into the future of driving. In addition, as popularity increases for the telematics system, the expense will reduce through economies of scale, ensuring this kind of cover is more attractive to a greater cross-section of drivers.

What are the disadvantages?

While black box insurance is acclaimed as one of the few methods to gain affordable car insurance for young drivers, inexperienced motorists must be vigilant that some policies are more expensive than traditional cover. Hence it is so vital still to shop around – and to not automatically assume that you will find cheaper cover with a black box insurance policy.

Also, telematics technology may not work for everybody. Motorists who have a greater yearly mileage may result in higher expenses compared to an ordinary policy.

In addition, motorists paying the cheapest premiums at the moment, like middle-aged drivers with fine driving records and complete no-claims bonuses, are currently unlikely to find cheaper cover with telematics policies as opposed to conventional cover.

Shop around for black box car insurance policies

When purchasing any kind of car insurance policy, including a black box insurance policy, you must conduct your research through shopping around.

The simplest way to compare premiums and prices across the industry and find is savings can be made by opting for black box insurance, is through using price comparisons services such as freepricecompare.com. In a small number of clicks, you can find the policy right for you at the best price.

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