Is telematics the right car insurance for you?

Emma Lunn
·5-min read
 (Unsplash)
(Unsplash)

There are an estimated 975,000 telematics insurance policies active in the UK, according to the latest figures from TheBritish Insurance Brokers’ Association (2018) out of approximately 33 million registered cars.

But exactly what is this kind of insurance policy, and should you be using it?

What is telematics car insurance?

Telematics car insurance is a way to track and score someone’s driving.

If you have a telematics car insurance policy, the insurer will monitor your driving via a form of technology to assess how safe a driver you are.

It will then use this information, alongside other factors, to decide how much to charge you for car insurance.

This is in contrast to mainstream car insurance policies which calculate your insurance premium by either looking at your past driving record or making muchy broader assumptions about your driving based on your age and experience.

Telematics car insurance is also known as:

  • Black box car insurance

  • Smartbox car insurance

  • GPS car insurance

  • Smartphone car insurance

Telematics car insurance is usually targeted at young drivers who would otherwise face high or unaffordable car insurance premiums.

How does it work?

With telematics car insurance a gadget is fitted in your car to monitor certain asspects of your driving. The gadget is either a ‘black box’ – or just your phone if the telematics policy uses a smartphone app. Either way, information about your driving habits is transmitted wirelessly back to the insurer.

You will be monitored on aspects such as:

  • The time of day you drive

  • The speed you drive

  • How quickly you brake and accelerate

  • Your cornering skills

  • The number of miles you do

  • How many journeys you make

  • If you take breaks on long journeys

As you are usually able to see this information also, you can adjust your driving to be safer.

Your insurer will then use information transmitted to decide how much to charge you for car insurance. Premiums will be adjusted according to your driving either monthly or annually.

Some insurers will even return a portion of your premium to you, in cash or vouchers, at the end of the year if you’ve driven safely.

Who is telematics car insurance best suited to?

Telematics car insurance is normally targeted at groups viewed as high risk by insurers. These include:

  • Young drivers

  • New drivers

  • Drivers with a history of motoring convictions

Does telematics work with any car?

A telematics black box can be easily fitted to almost any make and model of car less than about 20-years-old.

Your insurance company will send someone out to fit the device for you – this normally takes about an hour.

The box is usually installed out of sight beneath the dashboard. It’s about the size of a pack of cards and won’t affect the functioning or electronics of your car.

Will telematics car insurance save me money?

Telematics car insurance can save certain types of driver money compared to a typical insurance policy.

Drivers who will benefit the most include:

  • Young drivers

  • Good and careful drivers

  • Low mileage drivers

  • Daytime drivers

  • Drivers who stick to the speed limit

However, telematics car insurance is unlikely to save experienced drivers money. It could also work out expensive for drivers who regularly break speed limits, break sharply, or take corners too fast.

Persistent speeders may have their telematics car insurance policies cancelled – this can make it difficult to get insurance elsewhere. However, contrary to myths about black box cover, the police are not informed if you break the speed limit.

Are there any extra costs with telematics car insurance?

When you take out a telematics car insurance policy, you might have to pay extra for:

  • Installation of the black box

  • Any missed installation appointment

  • Removing the black box at the end of your policy

  • Transfer fees if you get a new car

  • Repair costs if you damage the box

Will I be on a curfew if I have a telematics car insurance policy?

Not necessarily – but if you regularly drive at night you should check this before you take out a telematics policy.

Some policies set a curfew after which you are not allowed to drive. This is because night-time driving is statistically more dangerous.

Other telematics policies might increase your premiums if you drive frequently at night, for example, while some cap the number of miles you can drive each year.

Any other advantages?

Telematics car insurance can also help track your car if it’s stolen.

It can help in an accident too – if the box senses a significant impact, the insurer will attempt to contact you to check you’re OK. If it’s concerned about your wellbeing it may call the emergency services.

Black box data can also help in the event of an insurance claim. For example, it can tell the insurer where any impact was located on your car, the speed you were travelling at, and the date, time and location of any collision.

Can I earn no claims bonus with a black box policy?

Yes, you can earn a no claims bonus (NCB) while you have a telematics policy. Building a NCB will mean you will get cheaper car insurance premiums in the future.

Which insurers offer black box insurance?

Several mainstream insurers offer telematics policies alongside mainstream car insurance policies. These include Admiral, Co-op Insurance, Direct Line, Hastings Direct, Privilege and Tesco.

Other insurers or brands specialise in telematics policies. These include Carrot, Coverbox, Ingenie, Insure the Box, and Marmalade.