Tracy Johnson, Paralegal at Forrest Williams Solicitors

What is ‘black box’ technology?

Telematics car insurance is also known as ‘black box’ insurance, or ‘pay how you drive’ insurance.

If you are a responsible driver, telematics could help lower your insurance premium for good behaviour.

Telematics has been used in fleets for some time before being adopted as the standard in car insurance.

So – what exactly is ‘black box’ insurance and how could I benefit from it?

This type of insurance is otherwise known as ‘telematics’ cover, and involves a black box being professionally installed in your car. The box monitors how and when you drive and relays this information back to the insurer, which then calculates your premiums based on the data it has received.

Black box insurance, where premiums are based on your driving behaviour, is popular among young drivers trying to reduce the cost of cover – but motorists of other ages can benefit too.

Here are six types of driver who could benefit from having black box cover:

1 – Young drivers

Young drivers aged between the ages of 17-24 are statistically the most likely to be involved in a car accident, which means premiums can be sky-high. According to the Association of British Insurers (ABI), drivers in this age group are three times more likely than drivers of other ages to be responsible for “catastrophic claims”.

Back box insurance enables insurers to tailor premiums to suit each individual based on their driving habits, rather than relying on statistics alone to determine the cost of their cover. So provided young drivers can demonstrate they are responsible motorists, premiums will be lower than they would be if they opted for conventional cover.

2 – New drivers

If you’ve only recently passed your driving test, and therefore have limited experience on the roads, you will also be considered high risk by insurers, regardless of your age. Telematics insurance could help you pay cheaper premiums as premiums will be based on how and when you drive, so the safer you are, the lower your premiums will be.

3 – Low mileage drivers

If you only drive a few miles every so often, it doesn’t make sense to pay the same insurance premiums as someone who drives 10,000 miles or more every year. Many black box policies allow you to choose exactly how many miles you’ll drive, and use this information to help work out your premium. If you don’t exceed this number, then you won’t have to pay any extra.

4 – Careful drivers

If you pride yourself on being a particularly safe driver, black box insurance could potentially reward you with lower premiums.

5 – Slow drivers

Black box insurance is not for boy racers. You don’t have to crawl along the roads, but you must always stick within speed limits. Remember that speed can be assessed in other ways too. For example, if you take corners too sharply and are braking while doing so, this could work against you if you have a black box installed. Similarly, you’ll need to take care not to accelerate too fast away from traffic lights or to brake hard when you see a traffic jam in front of you.

6 – Daytime drivers

Driving late at night or in the small hours is considered much riskier than driving during the daytime. This means drivers with black box insurance are likely to see premiums rise if they regularly drive at night, while some insurers have curfews, so that if you drive late at night you could be fined or see premiums rise. If you tend only to drive during the day, then black box cover could be for you as you will be rewarded for driving during “low risk” periods.

The future is black…

Estimates show that up to 20% of young drivers could be using black box car insurance by 2020.

Studies have shown that up to 57% of all drivers in the UK intend to switch to telematics insurance by 2017.

So – what should I do next?

There’s a lot to consider, so we’d advise spending some time reading up on telematics car insurance reviews, telematics technology and telematics comparisons. In this way, if you could benefit from black box technology, you can consider all your options before making an informed choice.