It’s extremely expensive for a young driver to insure a car in the UK because young drivers are far more likely to have an accident than experienced drivers. The price can make it impossible to own a car. As insurance is compulsory, it pays to look at ways to make it cheaper, and telematics-based insurance policies, sometimes called black box or smart box insurance, is one of those.
What is telematics?
Vehicle telematics is the process of monitoring and logging your vehicle’s driving in order to produce a record that can be used to ascertain your risk level, and transmitting that record to your insurance company. The insurance company will have an engineer fit a black box to your car which monitors your actions at the wheel.
The data is used to provide you a personalised price for your car insurance solely based on how you drive. As most insurance policies are based on the average driver’s likelihood of having an accident, if you are a safe driver you end up paying unfairly for the quality of driving of risky drivers.
Insurance companies that use telematics can tell when, where, how far and how you are driving. They may allow an extra discount if you agree not to drive between riskier hours, e.g. 11pm to 5am (insurers like iKube and Co-op offer this). If you are on a pay-as-you-drive or usage-based policy, the black box will monitor the total distance driven (the longer you are on the road, the more risk you have of having an accident).
The black box measures the forces on your vehicle due to acceleration, braking, cornering and speed. The insurance company is looking for gentle inputs and compliance with the speed limits. It won’t penalise you for braking hard once or twice – this may have been because you were avoiding a child running out into the road – but it will build up a profile of your general driving style over time and that allows it to create a risk profile.
The black boxes have GPS units in them which means they can be used to track your car if it’s stolen. It also means that the insurance company can tell the type of roads that you drive on.
The black box is sealed; if you tamper with it your insurance company will send you a large bill for a replacement one and will void your insurance policy. It’s usually free or very cheap to get the black box installed, although if you miss the appointment with the installer the insurance company may charge you for a second appointment.
The risks of telematics are that the black box does not know who is driving the car. If you let someone else drive the car then you are risking that they will destroy your good driving record.
You will usually be insured from the moment you agree to the policy, even before the black box is installed.
Before you agree to a policy, check how much extra you will have to pay if you don’t drive within the guidelines of the insurance company. An insurance company such as Marmalade gives you a warning if you are driving unsafely and time to remedy it. This flow chart explains their process.
Telematics drivers tend to have between 20-30% less claims than other drivers.