Telematics insurance involves fitting a little black box, roughly the size of a smartphone, into your car so that your insurer can monitor the way you drive.
If you drive safely and sensibly, your premium will be reduced.
Careful though - your insurance prices will go up if you’re a reckless driver.
Telematics insurance tracks your driving so your insurer can see how safe you are on the road.
Your braking habits, speed, distance travelled, and what kinds of roads you travel on are recorded using GPS for your insurer to examine
Most policies will give you access to an online dashboard or smartphone app where you can review your driving habits and learn how to improve them
Your insurance premiums will go up or down based on how well you drive. Some providers will calculate your renewal price based on this, while others adjust your policy price mid-term.
The fitted blackbox, plug-in, app or built-in telematics software begins collecting data about your journeys and driving habits immediately after it's installed and switched on.
It uses GPS to track where you're going, if you're using busy A roads, like motorways and dual carriageways, or slower and quieter B roads.
It records information about emergency stops, cornering, heavy braking, or impacts.
In fact, every aspect of your driving's tracked - whether you're regularly navigating rush hour, your speed, total mileage, if you break up long journeys, and how often you travel in the car.
In your first year of using blackbox technology, it collects and analyses your data. When it's time to renew your policy, one year later, it applies its learnings to calculate a new, and hopefully cheaper, quote. The better your score, the better the discount.
That doesn't mean it'll be the cheapest or best policy for you though. Shopping around and looking at comprehensive, third party (TPO), and third party, fire and theft (TPFT) policies, plus the other options available to you, is the only way to know for certain.
That does mean that in your first year as a telematics driver, you might not see any cost savings until it's time to renew. But you may get other discounts applied to your policy, for example, if a new customer discount or no claims bonus if you've had a few years' of claim-free driving already.
Comprehensive car insurance is the highest level of cover you can buy. It covers you, your car, your passengers, plus the driver, passengers and third party vehicle if you're in a traffic accident.
It's the type of cover that makes you feel secure no matter what situation you're facing, particularly if you're a new or young driver.
The average price of an annual fully comprehensive car insurance policy bought in June 2019 was just £534. Unfortunately, it's consistently more expensive if you're a young driver. We discovered that the cost of an annual comprehensive policy was around £1,000 if the policyholder was 17.
Telematics insurance is usually aimed at younger drivers. If you’ve not been driving long it’s a way to save money on your car insurance in return for proving you’re a safe driver.
But good drivers of any age could benefit. If you tend to drive in your local area, have a low annual mileage, and mostly travel short distances, your insurers will recognise this and lower your premiums accordingly. But, some providers only allow drivers under 25 to have blackbox policies.
Black boxes are also useful if you want to prove you’re a good driver despite falling into other high-risk categories. For example, if you’re a racing driver or have a criminal conviction.
If you only drive at low-risk times of day, that can bring your premium down as well. This is almost any time outside rush hour, excluding the middle of the night - which is usually considered higher risk.
“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 pay more for your premiums”
Motoring expert at GoCompare
Most newer cars have telematics hardware pre-installed. If yours doesn’t, don't worry - the additional tech's discrete and the insurer might even send an expert to get it installed for you.
If it's an easy job, the insurer sends you a plug-in device that you install yourself by pushing it into a socket under your dashboard. Others ask you to download an app for your smartphone so that you use that as the black box instead.
If once it's installed, you think it's causing damage, obstructing fans, disrupting the electrics, or you just suspect it's faulty, you need to bring it up with your insurer as soon as you notice.
If the insurer supplied the technology, it's their responsibility to make sure it's working for you. If you're concerned, document your car's state of repair before having telematics installed and store it with your service record docs, just in case you need to show evidence of damage.
Just as with any car insurance policy, you want a policy that works with your lifestyle, not against it.
Every telematics insurer has its own set of exclusions. Those exclusions could cause you grief if you ever need to claim, so take your time to find the right policy for you.
If you work shifts and need to drive throughout the night, check that your blackbox policy doesn't have a curfew. A curfew stops you driving late at night which is a high-risk time to be on the road, according to insurers. If you get behind the wheel anyway, you won't be covered.
Some telematics policies impose a mileage limit and a fine if you exceed it. Check the mileage is realistic before signing up. If your mileage increases after you take out the policy, speak to the insurer about extending your cover.
If you're concerned about protecting the driving data collected by the blackbox and how it may affect the price of your future policies, your insurer shouldn't share or sell any of your information to other insurers.
What you pay now will have no bearing on what you pay in the future - when the time comes to renew, you're starting afresh with a new set of quotes. Your price will go up if you make a claim, but if you have a good year and start building up your no claims bonus, you'll start to see savings.
Some of the insurers who can offer you telematics insurance with GoCompare are:
As a named driver, you're listed on another driver's policy. You're not the policyholder. If the policyholder has a number of years no claims discount, you'll benefit from the savings they recieve as an experienced driver. If you're the main driver but listed as a named driver, you're breaking the law by fronting.
If you only need to be on the road for a matter of days, hours, or even miles, short-term car insurance covers you just for the period you need.
Pay as you go insurance covers you for the distance you travel or the amount of time you're on the road - policies and terms vary between insurers.
Although it's your car, the insurer owns the physical GPS tracker or blackbox tech. When you want to stop the device tracking your driving, the insurer might deactivate it remotely, or send an expert or engineer to remove it from the car. If you want it removed before the end of your policy, you might be charged a fee.
It depends on the age of your car, but for most cars which are under 20 years old, there shouldn't be an issue. The blackbox is fitted under the dashboard - if you have any concerns speak to the insurer about your car's compatibility.
You can usually log into an app to review the data collected by the blackbox. You might be awarded bronze, silver or gold standard driving, as an example. If the insurer doesn't have an app, it may send you regular updates and feedback, possibly picking out areas where you can improve to help control the cost of your premium.
The blackbox can't tell the difference between you and another driver. If someone else consistently drives your car and their braking, cornering and speeding habits are riskier, your premium is likely to increase. If it's just once or twice, it should average out over the whole year and you'll see very little cost difference, in theory. Don't take the chance - if someone else drives your car, point out the box and ask them to take it easy.
Average cost of annual car insurance by policy type bought through GoCompare in June 2019
Correct as of 24 July 2019
*Average cost of annual car insurance purchased in May 2019 via GoCompare when the policyholder is 17