Telematics car insurance is becoming increasingly familiar in the UK as a measurable cover option - find out more with the answers to FAQs.
Telematics insurance - also known as black box insurance, GPS car insurance, smartbox insurance, pay-as-you-drive insurance and usage-based insurance - calculates premiums based on your driving habits and ability.
You'll either be set up with a mobile phone app or a black box will be fitted to your car to monitor driving habits, with information fed back to insurers. The insurer can then adjust your premium up or down accordingly, or offer other incentives for what it perceives as good driving.
It's generally thought that these policies are beneficial for younger drivers who are struggling to find affordable car insurance premiums. In fact, drivers of any age and experience could potentially benefit.
If you use your vehicle at peak times and/or do a big mileage you're less likely to benefit, but it's worth comparing the options.
Your insurer should always ask your permission before sharing your data with any third parties who aren’t involved in delivering your insurance policy
Boxes are usually about the size of a mobile phone and are discreetly placed to suit the vehicle.
If you have a black box it can enhance security as it works like a tracker on your vehicle. Telematics policies have also be seen as educational, a tool to improve driving. Some companies offer an online portal where drivers can review their driving behaviour.
There may be a facility included to contact emergency services in the event of an accident, and it's been suggested that black box policies may improve claim handling and help to prevent fraud by providing independent, objective evidence about an incident.
As with other car insurance products, you'll usually need to ensure that you're named on the other vehicle owner's policy.
The insurer will then base driving skills on the overall way that the car is driven.
Your insurer should always ask your permission before sharing your data with any third parties who aren’t involved in delivering your insurance policy.
Insurers will not share your data with the police or any other authorities unless they're forced to do so by a court order or you've given your express permission to do so. Usually data will only be used to manage your insurance policy or in the event of an accident or claim.
A number of insurers, both mainstream and niche, offer telematics insurance and the policies will differ between companies.
The European Court of Justice gender directive has had a huge impact on car insurance, especially for young drivers and women drivers. If you've been adversely affected, a pay-as-you-drive policy could be a way to minimise the impact of rising premiums.