Black box insurance, also known as telematics insurance or pay-as-you-drive insurance has never been more popular, but how does black box insurance work and what are the pros and cons?
Black box insurance
Black box insurance is great for drivers only using their cars once in a while and are frustrated by the high cost of car insurance.
And if you’re a young or elderly driver and get penalised with high premiums, despite using your car infrequently, black box insurance could help.
Black box car insurance counts the miles you’ve driven, so you only pay for what you use.
What is black box insurance?
The technology works by having a telematics box fitted in your car. The box links to a satellite to measure your usage, allowing you to check your own driving online, hence the name ‘pay as you go insurance’.
Black box insurance technology measures everything from acceleration to cornering, so your insurer can get a comprehensive impression of your driving habits and charge you accordingly.
Typically drivers are charged a fixed premium with a certain number of miles allowed per year, however some policies work by refunding drivers for good behaviour and increasing the premium for poor driving scores.
Some black box insurers like work more like mobile phone contracts, so you top up in bundles of miles depending on how much you’re driving.
Who is black box car insurance for?
The figures show that young drivers are more accident prone, and hence more likely to claim on insurance than other age groups.
Consequently, if you are a safe driver under 25 you will probably benefit most from black box insurance policies.
The latest research shows male drivers between 17 to 18 pay more than £2,100 — black box insurance is a sure way to bring that figure down, providing you don’t drive too much.
It’s not just young drivers who can benefit from black box insurance. If you use your vehicle outside peak traffic hours there’s a good chance you could save, with insurers charging less thanks to the emptier roads.
Pros of black box car insurance
The advantages of black box car insurance are simple. As your premiums are almost entirely dependent on the amount you drive, driving less is an easy way to save and build up your no claims record.
This also means the likelihood you will be in an accident will decrease, with the insurance industry estimating that black box insurance decreases accidents by 20%.
Some black box insurance policies could even help to save your life if you do have an accident. Certain telematics devices can send an accident alert to your insurer if a sudden stop or impact is detected. Your insurer will call you to check if everything’s okay, and if they can’t get in touch they can alert the emergency services and inform them of your location.
Black box car insurance can also benefit the environment, as it makes you more likely to chose public transport instead of the car, particularly if it means your premium will increase or you will exceed your mileage limit.
What’s more, if your car is stolen, fitted black boxes can act as a tracker so you can retrieve your vehicle.
Cons of black box insurance
Unfortunately there are some downsides to black box insurance that you should consider.
For instance, if your circumstances change thanks to a change of job, or you moving house, it will impact the number of miles you drive.
Black box insurance devices also can’t tell who is driving the car, so while you may not use the car another driver could exceed your miles or lower your driving score and end up costing you a lot.