In the last few years, providers have used modern technology to come up with a great way for drivers to get cheaper car insurance, regardless of driving experience. You're rewarded for safe driving. This comes in the form of what is variously known as black box or telematics insurance policies.
How does black box insurance work?
Those who purchase these policies will be provided with a ‘black box’, a small device that records information about your driving, including mileage, adherence to speed limits and braking and cornering data. This allows the insurer to build up an accurate profile of the policy holder and to tailor the premium accordingly.
Such policies can be particularly useful for newly qualified younger drivers whose premiums can often be prohibitively high due to national statistics that show them as particularly high risk when it comes to road traffic accidents.
Costs for conventional insurance policies for young drivers are based on Department for Transport statistics that show that a fifth of all newly qualified drivers are involved in some kind of crash within a year of passing their test, and that a third of all road fatalities are caused by 19-25 year olds. With a black box policy, your premium will be based on your personal abilities and tendencies – rewarding careful drivers with much lower premiums.
There are different ways in which insurers can use telematics or black box technology in order to work out the costs of each insurance policy.
While some use data to work out a general profile of the driver and calculate premiums based on general performance, others work on a pay as you go basis, charging the policy holder for each mile driven. This is based on the fact that fewer miles driven means a lower risk of an accident occurring and a claim being made.
Is black box insurance always a good option?
As a young driver, taking out a black box insurance policy is one of the surest ways to save money on your cover, requiring you to simply drive carefully and responsibly and enjoy reduced premiums as a result. You may need to wait for a year or so for your premiums to go down, as the insurer needs time to build up a profile of you as a driver, but once they do you can expect rates reduced by a third or more.
However, if you feel that you are likely to have a particularly high annual mileage, or to drive often at peak times (which will be defined by the individual insurer), then a black box may not be the best idea for you. This is often the case for experienced, middle aged drivers who are likely to experience low premiums anyway and are thus not particularly likely to benefit from a telematics technology.