How Does Telematics Insurance Work?

December 13th, 2019

Statistically young drivers are the most likely to be involved in an accident/ make a claim and hence they have some of the highest insurance premiums around. But to combat this, many insurers now offer telematics insurance, also known as black box insurance or pay as you go insurance. This type of insurance effectively tracks the driver’s behaviour i.e. acceleration, cornering, speeding and time in which the car is used to provide a more bespoke quote.

Telematics insurance

The reason telematics car insurance is often referred to as black box insurance is because the insurer will physically send an engineer out to come and fit the black box in your car. This device will then be able to track your vehicle to provide the insurer an accurate reading of your behaviour.

To add, using the insurer’s website you too will be able to monitor your progress and tips will also be provided if you wish to improve your driving score/ become safer on the road. Generally, to have a good score it pays to reduces your average miles on dangerous roads and avoid doing night time driving as this is seen to be more riskier by the insurers.

Moreover, the insurance premium charged by the company is not always on a yearly basis. By charging motorists on a month by month basis, the car insurer can adjust its premium by rewarding drivers will a smaller premium if they are driving safely and punish them with a higher premium if they are not so safe.

Cost per mile

The telematics technology is essentially the same between the different insurers but the way it gets utilised can be different. One such way, is by the insurer providing cover for a certain number of miles. However, this mileage cover is not static, so the insurer may reduce the miles if the vehicle is used during risky times i.e. driving at night or driving at rush hour.


In some cases however, your insurer may impose restrictions such as where you can drive and at what time i.e. night time driving may not be permitted. Moreover, you insurer can constantly track your vehicle, so you may wish to check out their privacy policy and use of personal data. Furthermore, insurers may charge for installation and cancellation of the car insurance policy, so you should check that with a keen eye. Nonetheless, despite this restriction telematics insurance is growing in popularity and it can be easy to see why that might be the case.

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