Black box insurance policies – the good, the bad and the ugly.

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What is Black Box car insurance?

Black box car insurance uses telematics equipment to monitor how you drive. This information is then used by car insurance providers to determine how much your premium will be.

There are three different types of telematics available. They are:

  • Plug and drive – this uses a device that plugs into your cars charging point or cigarette lighter port and then uses GPS to track how you drive.
  • Black Box – this is the most common form, when an insurance provider puts a black box in your car which uses GPS to track your driving.
  • Smartphone app – some insurers allow you to use a smartphone app to track your driving habits without having to install a separate device

Black box insurance – the good

The idea behind black boxes is that you can use them to prove you are a good driver and therefore lower your insurance policy. This is particularly useful for drivers that fall into high risk categories such as young or new drivers, or those with a motoring conviction.

As an example, data from MoneySuperMarket based on more than one million quotes shows that on average for drivers aged 17 to 19 a black box policy will save them £855 a year. Instead of paying £2,079, drivers with a telematics system fitted pay an average of £1,224 – a saving of 41 per cent.

Black box insurance – the bad

While black boxes are great in theory and as data shows, they can indeed save high-risk drivers lots of money, new analysis has shown that for some groups of drivers they could actually ramp up costs. For example, a report in the i newsletter found that for those aged 30 and above, they actually push up the price of premiums by as much as £200.

In addition to the above, it is worth noting that there is sometimes a cost to having a black box fitted, usually around £100. Having said that, with savings of up to 40% to be made by using the black box, this cost is often justifiable although it is necessary to pay this up front which some drivers may struggle with.

Black box insurance – the ugly

In addition to the recent news about the impact of black boxes on the over 30s, the technology has also had its fair share of controversy in the past. In 2016 for example the BBC’s Watchdog programme reported that some black boxes had transmitted false readings. In one case, a driver’s black box recorded them speeding at 119mph on a B road. Watchdog hired a professional racing driver to prove the car wasn’t capable of going that quickly. In another case a driver was recorded driving for five days non-stop. Unsurprisingly, this was proven to be incorrect. In both cases the drivers were compensated for their inaccurate premiums.

Having said the above, technology has moved on a lot since 2016 and recent cases of black boxes providing misinformation are practically none existent. And, if you’re under 30 or have a driving conviction using one could save you a lot of money on your car insurance premium. However, while a hot topic and certainly gaining popularity among insurers black boxes aren’t for everyone and if recent data is to be taken into account and you’re over 30, possessing one could push your insurance up significantly and therefore the new technology just isn’t for you.

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