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Telematics – or black box car insurance – is a handy bit of kit for your car, and can even help you save on your car insurance.
But what is it, and how does it work?
What is telematics car insurance?
In the simplest terms, it's a way for your insurers to monitor your driving and adjust your insurance prices accordingly. Drive safely and sensibly, and you could enjoy a reduced premium.
But if your driving would make Evel Knievel reach for his seatbelt, then you may find your premiums going up.
How does your insurer know if you're a safe driver?
A little black box, roughly the size of a smartphone, is fitted somewhere in your car, usually behind your dashboard. Once the black box is installed, it analyses the way you drive.
Your braking habits, speed, distance travelled, and what kinds of roads you travel on are all recorded via GPS for your insurer to examine. The insurance provider will then be able to recalculate your premiums accordingly.
Most policies will even give you access to an online dashboard where you can review your driving habits and learn to improve them.
At one time, the installation of a black box could be quite an intrusive process for your vehicle. Fortunately, this is no longer the case, and most new cars have telematics software pre-installed.
Even if your car doesn’t, having a black box fitted is now straightforward. With many policies, you’ll be sent a plug-in to install yourself. Some policies keep it more simple still, letting you download an app to your smartphone to minimise the hassle.
Who can benefit from cheap telematics insurance?
A black box insurance policy is often pushed towards younger drivers as a way of ensuring their premiums are more affordable. But that's not to say it's only for young drivers. Good drivers of any age could enjoy black box benefits.
For example, if you tend to stick within your local area, don't build up too much of a mileage, and mostly travel short distances, your insurers may recognise this and lower your premiums accordingly.
Driving at low-risk times of day may bring your premium down as well. This could be almost any time outside rush hour, for instance. However, night-time driving is usually considered high-risk.
It may not be suitable for all drivers, however. Depending on the policy you have, you may have restrictions to which you'll need to adhere to avoid any penalties.
For example, you may have a curfew time, or a mileage limit. If these are broken regularly, it could lead to higher premiums at renewal.
GoCompare’s car insurance expert Matt Oliver says: "Telematics is a very useful tool, but any tool is only as good as its wielder. If you ignore your black box, and don't drive carefully or within any pre-arranged limits, you could find yourself paying more for your premiums."
How is black box car insurance calculated?
Once the little box has been installed, and started transmitting data to your insurers, what happens next?
Well, black box insurance policies are calculated in a similar way to normal insurance policies. They’re based on rating factors – including targets your insurers set.
If you hit them, or miss them without a good reason, this can then be looked at by your insurers to determine your insurance rating.
Did you know...?
Black box insurance has been on the UK market since 2008
For instance, your insurer might use mileage as a rating factor. You might agree an annual mileage allowance with them, and if you exceed it, your premium may increase.
Driving behaviour ratings will include things such as the way you accelerate and brake, the speeds you tend to drive at, the type of roads you use most often, and the time of day you travel.
Drivers that hit their targets and fulfil what they’ve agreed with the insurer could be rewarded with a lower premium for driving in a safe way.
Those who don't drive safely will usually pay more.
Remember to check whether your policy assesses you on your driving behaviour or mileage.
As mentioned, most telematics policies come with a dashboard where you can review how you're doing against your targets.
Finding the right telematics car insurance
We can't tell you what the best kind of policy is for you. But we can tell you that telematics policies can be found by getting quotes on our site, so we can help you compare policies to find one that's right for you.
Depending on the provider, it's quite likely that you'll only be able to get fully comprehensive cover. While this is a good option in general, it may not be the most affordable in terms of upfront premium costs, so bear this in mind when considering telematics policies.
To help you decide which policy is right for you, there are star ratings from independent financial researcher Defaqto to help you make an informed choice.
Telematics is worth taking some time to get to grips with, because it’s here to stay. "Increasingly, manufacturers are installing telematics into newly built cars as standard," says Matt Oliver.
“This doesn’t mean that drivers have to use it. But its availability may be beneficial to certain motorists, particularly younger or inexperienced drivers. It could provide them with the means to prove to insurers that they’re safe on the road, and in turn potentially save on their premiums.”
So, although it may feel a bit invasive to have your insurer monitoring your driving habits, it could just save you money in the long run.
From April 2018, all new cars produced in the EU will also have software known as eCall installed.
The eCall is a very useful bit of tech that can help you out after a crash by both calling the EU emergency number of 112, and then transmitting your location to the emergency services.