Black box car insurance explained: what a telematics box is, how it works and how the price compares

Black box car insurance explained: what a telematics box is, how it works and how the price compares
Black box car insurance explained: what a telematics box is, how it works and how the price compares

Until fairly recently car insurance was a simple – if sometimes expensive – matter. The only choices drivers had were which insurer to go with and what level of cover to take – comprehensive, fire, third-party and theft, or third-party.

Now not only are there different levels of cover but there are different types of insurance, including pay-per-mile insurance and black box or telematics policies.

What is black box insurance?

Black box insurance uses a tracking and recording device – like a plane’s black box – to monitor your driving behaviour and allow your insurer to tailor your premium to your driving.

If your insurer rates you as a good driver you will be rewarded with lower premiums. If your driving doesn’t meet their standards you could see your bill going up or even risk having the policy cancelled.

How does it work?

When you take out a telematics policy your insurer will arrange to have a small “black box” device installed in your car. Some insurers will have a specialist fitter install the device in the vehicle, others will supply a small unit that you plug into your car’s diagnostic port and some use a smartphone app.

The devices use GPS and G-force sensors to record multiple aspects of your driving behaviour including how hard you accelerate and brake, how you corner, the times of day you drive and how far and how often you drive. It is always on so records every trip you take and transmits this data back to your insurer.

Black box systems record everything from you acceleration and braking to the times of day you drive (Photo: Shutterstock)

Using this information, your insurer can build up a picture of your driving and will rate you – often referred to as a driver score. You can then be rewarded based on your driver score, usually in the form of a reduced premium for the next year.

If the data shows you regularly driving “badly”, for example speeding, your insurer is likely to offer advice on improving your driving but could decide to increase your premium, decline to re-insure you or, in extreme cases, cancel your policy immediately.

Read more: Car insurance extras explained: how to decide which add-ons are worth including in your policy

Who is it for?

Black box insurance is often marketed at younger drivers but most insurers will offer it to any driver who wants it.

It can be particularly helpful to inexperienced drivers or motorists who have been named drivers on other policies and haven’t built up an insurance profile despite driving for years.

Will it save me money?

Telematics insurance is often marketed as a way of reducing insurance cost but it’s not always that simple.

The policies can help younger drivers save substantial amounts on their insurance – as much as 40 per cent. With the average premium for a 17-19-year-old standing at £2,079 they could represent significant savings, especially for those just starting out behind the wheel.

However, figures from MoneySuperMarket suggest that the benefits reduce with age and older drivers can end up worse off if they opt for a black box policy.

Where and when you drive can also affect how helpful a telematics policy is. If you cover a lot of miles or have to regularly drive at night or during rush hour they might be less well suited, even if you are a careful driver.

young driver
Telematics policies are often aimed at young drivers as a way to reduce their insurance costs (Photo: Shutterstock)

Are there additional fees for black box insurance?

Most insurers will not charge you extra for installing the black box but some will charge you if you want to move it to a different vehicle. If you choose to cancel your policy or move to another insurer most insurers will deactivate the box remotely but some will charge you for this. If you want to have the box removed, they might also charge to have an engineer do this.

Will black box policies restrict my driving?

Most telematics policies don’t place restrictions on your driving but your premiums can still be affected by lots of high-mileage or late-night driving.

Some policies do include a mileage cap and some might place restrictions on when you drive but this will be clear in the policy documents and your insurer will warn you if you drive outwith these restrictions.

Contrary to some myths, insurers will not automatically report you to police if your in-car box records you speeding, and they will not fine you for going a few miles over your estimated mileage.

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