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.
Frequently asked questions
What happens if you speed with a black box?
If you drive over the speed limit with a black box installed, your insurance provider will usually get in touch with you to discourage you from doing it again. If you persist then your driver score, generated by your insurer based on the black box data, will be affected and this could lead to your insurance being cancelled. In some extreme cases your insurer could cancel the policy immediately.
In some scenarios, such as in the event of your car being stolen or involved in an accident, your insurer is legally obligated to provide your driving data to the police.
How much can a black box reduce insurance?
The difference in insurance premiums after fitting a black box can vary greatly from driver to driver. In general, if the black box finds you to be a safe driver, who covers the amount of miles they quoted on their policy and who doesn't regularly drive at night, you will be able to save money on your insurance.
There is, however, very little data available online about specific savings, so it's best to shop around for the most reliable black box insurers.
What happens if I unplug my black box?
If you take out black box insurance, your cover is conditional on your black box being operational and active. Therefore, if you unplug the black box, accidentally or otherwise, your cover will be void. If this is found to be an intentional action your policy could be cancelled.
How many years do you have to have a black box for?
Just like a standard car insurance policy, black box insurance generally lasts for a year, and you'll be offered a renewal when that year is up. There is no obligation to carry on with a black box policy after this time, but there could be benefits to continuing, such as reducing your premiums with careful driving.
Do all black boxes have curfews?
Some black box insurance policies have a curfew, but by no means all of them. Some insurance companies will employ a curfew on policies they see as high risk, such as newly qualified drivers, but not on low risk policies. It's important to take into account your driving habits when you're shopping around for car insurance and choose the policy that best fits you personally.
What happens if you go over your mileage with a black box?
Going over your mileage with a black box can lead to an increase in your premiums. Generally, your insurance provider will track your mileage for the first few months and compare this usage with your quoted mileage. If you're coming in over by more than a stated amount, generally 25%, your insurer is allowed to increase your premiums. They'll normally consult you about this, so it's worth being truthful from the start about your yearly mileage.
A benefit of having black box insurance is that this kind of thing can be ironed out throughout the policy, and you're less likely to be stung for falsifying your mileage on a black box policy.