In the past week, the AA, has followed in the footsteps of Aviva by withdrawing from the telematics market, due to the significantly High costs of running the technology. However, a new system is in the works by the AA, and so they hope to come back with a more cost-effective approach for both company and motorist. For telematics to go main stream it is imperative that information sharing becomes the norm Like in Italy, where data is standardised and shared. in the UK, this is something we are far away from and apathy can also be attributed to the fact that tracking devices could cost some motorists more, especially if their mileage is high or work nights as their insurance cover will be higher.
So let’s answer some questions. Firstly, what is telematics?
Basically, your car insurer fits a tracking device that monitors where you drive, when and how well including: cornering, acceleration, speed and braking. As stated earlier, current systems are not yet viable, with leading insurers deciding to create their own system. Bucking the trends are, Aviva that allows policy holders to utilise a mobile phone telematics app and the DrivePlus plug-in gadget by Direct Line that allows customers to self-install the device in their car rather have it installed for them.
Next up, who can share the data?
So far, with a court order for the insurance company, only the authorities can request to observe your driving history. Some insurers, such as Direct Line believe drivers are the rightful owners of the data and could take it with them should they change insurers, and use it as a tool to reduce their premiums by highlighting a record of good driving. Others think this is not actually possible and the jury is still out amongst insurance providers over who actually owns the data.
Would installing a telematics box lower premiums?
Possibly, Good driving could earn discounts of up to 40% but is dependent on a score based on acceleration, braking, cornering and speed. But, a very poor score could work against you upon renewal and increase premiums. Another factor will be yearly mileage what time of day you usually drive. For example, driving late nights is deemed high risk and will work against you.
Telematics is almost primarily aimed at the under 25s as their premiums are likely to be greater than £1,000 annually, hence it can be very advantageous. It also offers feedback on their driving performance and improves young motorists. Tracking devices can be handy when involved in a serious accident as the machine emits alarms that allow insurers to notify the rescue services. Also as a young driver that is more susceptible to accidents, showing you have learnt from a recent mistake can count in motorists’ favour.
Finally, how are policies differentiated?
From the beginning Direct Line offers a 25% discount to telematics customers, and subsequently scores motorists’ for all journeys. Good driving will then lead to a discount of up to 40% upon renewal or reduced to nothing.
Tesco and Insurethebox offer insurance cover to young drivers with low annual mileage. The award for driving well with these companies is bonus miles for free.
Drive Like a Girl, a policy for all motorists, offers a refund on your first premium after three months, for good driving, and up to £200 for one in 10 drivers with even more discounts upon renewal.
The Co-op’s young driver policy monitors driving habits every 90 days, and rewards motorists with a refund on premium for good driving.
Lastly, Aviva provide a telematics mobile phone app which could be installed on the phone. You are offered an initial premium before signing the contract, as Aviva monitor your habits for 200 days. Subsequently, your cover could be lowered by 20% on the basis of your driving. But mobile phone apps are seen as less reliable as they can be turned off by drivers hence discounts won’t be as high.
How do you get the cheapest car insurance?
Price comparison sites offer a great starting point but some of the larger insurance companies such as Zurich and Direct Line only work directly with customers. Some insurers also provide additional benefits which should be considered like the Post Office who promise over-50s that they will outdo customers’ renewal quote by £50.