What is black box insurance?


Financial Guidance

The cost of car insurance is made up of a variety of factors – the age of the driver, their driving history as well as other factors such as the type of car they drive or their profession. These can mean that certain groups pay higher insurance premiums than others, such as those who have recently passed their test or older drivers. But there is one type of insurance that these types of drivers could benefit from –black box insurance.

Black box insurance

Black box insurance – or “telematics” as it is also known – works by having a box installed in your car that monitors how and when you drive and relays this information back to your insurer. Black box technology measures every part of your driving, including braking, speed, acceleration, cornering and the time of day that you make your journeys. Some policies now don’t even need anything installed in the car – they use data collected by a special app that you can install on your phone.

This information is fed back to the insurer, who can then calculate your monthly premiums based on the data that they receive. If you’re able to demonstrate your ability as a safe driver then you could save as much as a third on your premiums. Be aware though, that higher premiums could be imposed if your driving is shown to be consistently poor or dangerous.

Who is black box insurance for?

As insurers calculate policy costs according to statistical risk, young drivers in particular can find it hard to get affordable cover. Figures from the Association of British Insurers (ABI) reveal that drivers aged between 17 and 24 are three times more likely than other road users to be responsible for “catastrophic claims”.

Young drivers in particular are therefore particularly suitable for black box insurance, as it gives them the opportunity to prove that they’re capable behind the wheel. According to Consumer Intelligence, under 25s are currently paying 5.5% less for car insurance because of this. New drivers (no matter their age) are considered more of a risk due to their lack of driving experience, so could benefit from black box insurance as well.

If you’re a low mileage driver, it doesn’t make sense for you to pay the same as someone who commutes to work every day, so you could reap the rewards of this by opting for black box insurance. Some policies will even let you choose exactly how many miles you’ll drive and use this to work out the premiums you’ll pay.

As driving late at night or in the early hours is considered more of a risk than driving during the daytime, your premiums could be affected by your daily driving habits. So if you work shifts and tend to get home or leave in the early hours of the morning, black box insurance will probably not work out any cheaper for you. If you typically only drive during the day though, you could see your premiums fall.

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