Telematics based car insurance? Sounds hi-tech. What’s it all about, then?
In short, it’s a type of car insurance policy which utilises telemetry and satellite technology, much like the sort used in navigation systems. A device, usually installed under the dashboard of the car, records and transmits data back to your insurer about where and when you drive, and in some cases, how safely.
Golly. That sounds like something out of George Orwell.
Some people might have reservations about being ‘tracked,’ but the reality is that most of us already have some sort of GPS system already, particularly with the increasing ubiquity of gizmo-packed smartphones. The main selling point for telematics-based insurance policies, such as those offered by companies like Coverbox and Insurethebox, is the potential saving on car insurance they can - and frequently do – deliver.
Just ask Steven Reeve, a driver from Blackheath, South East London. He turned to Insurethebox when his motor insurance policy for his Suzuki Vitara was coming up for renewal. “Having been with many other insurance companies over decades of driving, Insurethebox came back with a really competitive quote for a fully comprehensive policy which was a lot less than I was paying for third party fire and theft with my previous insurer,” he explains. “I’ve been driving for almost 30 years now and do very little mileage on a yearly basis so paying for insurance on a pay as you go scheme like Insurethebox really works for me. I ended up paying just £400 a year” he says.
So, why is this good for younger drivers?
The accident and death statistics for young drivers – particularly young men - make for some pretty grim reading. As such, insurers slap young drivers with high premiums for the first few years of their driving career. But telematics-based insurance gives less experienced drivers the chance to demonstrate to their insurer that they’re low-risk prospects.
Tom Mcluskey, a young driver from Romford is one such driver. “It (the insurance policy from Insurethebox) gave me the unique opportunity to prove myself on the road,” he says. “It gives the driver the opportunity to break away from the stereotypes that exist around young drivers. My driving habits are picked up by the telematics box, and dependant on my driving, I get a quote that mirrors this behaviour.”
The savings can be pretty meaty. Yorkshire-based Susan Tilbrook was flabbergasted when the cost of her annual policy rocketed after adding her son Liam to the policy. With a telematics-based scheme, she managed to save £1,500 compared to offers elsewhere.
What else is in it for me?
Well, if your vehicle gets stolen, your insurer and the police will be able to track it down easily, thanks to the GPS technology. “The tracking device really swung it for me,” says Alex Crooks, a 24 year old web developer from Portsmouth, who has a policy with Coverbox. "It’s something that would normally cost hundreds of pounds.”
In some cases, you might also get ‘bonus miles’ rolled over to the next year, or earn points to spend on the high street. You’ll also be able to log in online and check your driving habits to see where there’s room for improvement.
Sounds like a boon for parents and guardians…
Certainly could be. If parents or guardians are the ones holding the purse string, then it’s only natural that they might want to keep an eye on where, when and how the car is being driven. Logging in to the insurer’s online portal allows them to do this quickly and easily.
I suppose this is where you bring the caveats up…
These depend on the insurer providing your policy, so make sure you read the terms and conditions as you would do with any agreement. Most telematics-based policies have ‘peak’ times in which driving becomes more expensive, like weekday ‘rush hours’ when the roads are packed with commuters trying to get to work.
Young drivers are also sometimes subject to ‘super peak’ rates, in which they’re subject to higher rates at dangerous times to be on the road, like very late at night and in the very early hours on weekends.
So why haven’t more people got a telematics based insurance policy yet?
Telematics-based insurance policies are still a relatively new thing. But after a controversial ruling by the European Court of Justice earlier this year, they could become much more commonplace. From 2012, insurers will no longer be able to use a driver’s sex to calculate the annual cost of a car insurance policy, so tracking-based policies may just be the most effective way to monitor how much of a risk a driver is. Don't be surprised if you start hearing of a lot more drivers getting a piece of the action in the very near future...