A simples guide

Common features of black box car insurance

Black box car insurance  - or as it’s known in the industry, telematics car insurance, is a type of insurance policy that calculates your premium based on how you drive.


How does the black box work?

The ‘black box’ refers to a small, discreet GPS box which is installed in your car. This could be behind the dashboard or in your glove box or alternatively, the ‘black box’ could take the form of a smart phone app.

Whichever method is used, the box or app collects data about your driving performance and relays it to your insurance provider. Sometimes you can also see this data which is usually provided via a web based dashboard provided by your insurance provider.

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What data do insurance providers use?

While each insurance provider will have slightly different metrics it uses to decide how well you are driving, they usually take into account the following information:

  • Speed. Do you stick to the speed limits?
  • Steering and braking. Do you steer gently or veer violently? Are you braking steadily, leaving plenty of time or are you braking too hard?
  • What time of day you’re driving? This is used to determine whether you drive at statistically riskier times such as at rush hour or at night.
  • Where you’re driving. Are you using busy roads, driving in town centres or quiet country lanes for example?
  • How many miles you’re driving. The more miles you drive, this could be seen as a greater potential risk.

How do insurance providers reward good driving behaviour?

Black box car insurance policies can take different forms. As a result, how you are rewarded depends on the type of policy you have.

Some policies reward good driving behaviour with discounts. With a policy like this you will be rewarded with money back off your policy payment if you drive consistently well. This could be monthly, quarterly or given as a discount at renewal time.

Other policies are based on mileage which have a limit as to how much you drive. These policies often have bonus miles as rewards which are awarded either monthly or quarterly.

While some insurance providers say they won’t increase your premiums during your policy period, others may introduce penalties if you drive badly. Some insurance providers will increase your premiums while others may have the option to cancel your cover all together if you exceed policy restrictions or you repeatedly break the speed limit for example.

Who is a black box for?

Black box policies were introduced initially to help younger drivers. This category of driver generally faces higher than average premiums due to the statistical likelihood of a loss occurring.

If you’re a careful and conscientious younger driver, standard policies have no way of taking your driving performance into account. With telematics policies, good individual behaviour can be taken into account.

Though they are most commonly used with younger drivers, anyone who would typically pay a relatively high price for their car insurance could benefit. This includes older or more experienced drivers who do fewer miles, or drivers with previous claims or convictions.

As well as giving drivers more control over the cost of their car insurance, it’s hoped that there will be another benefit of black box car technology. The technology incentivises good driving behaviour, so in time it’s hoped that telematics technology will help improve overall standards of driving

To conclude, if you are a considerate driver, drive at ‘off peak’ times of the day or stay away from the more hazardous roads, you could see a reduction in the price of your policy.

As with all insurance policies, you should always shop around for the best deal. When you use our comparison service, we can show you black box car insurance policies alongside standard policies so you can compare easily. Just tick the option to show telematics policies. Use our car insurance comparison service to find the right deal for you.