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What is black box car insurance?

What is black box car insurance?

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Automotive Journalist and Dad of three teenagers, John Swift, explains why he thinks black box car insurance is essential for young drivers.

Top 5 reasons drivers choose black box car insurance policies:

  • potentially reduces the cost of car insurance for the driver – 47%
  • helps with theft tracking if the car is stolen – 36%
  • helps with claim management after a car accident – 31%
  • provides a financial incentive to drive safely – 29%
  • help increase self-awareness of their own driving style – 27%

I’m a parent of three, with my eldest approaching the time when she will be thinking of starting to drive.

If she passes her test and wants a car one of the conditions I would attach to any talk of us buying her one is that it's fitted with a black box; and that would be non-negotiable.

Just as with a flight recorder in an aeroplane, albeit somewhat more simple, the black box will record where, when and most importantly, how she drives.

I have no interest in keeping tabs on her journeys, but I would be interested in seeing how she used the car, how fast the cornering, how hard the braking, how much steering she uses and so on and the black box, telematics call it what you will, would do that for me.

Woman holding an iPhone with telematics app open showing location map,fault notification and odometer reading for her car

Yet, despite all the evidence to the contrary, almost a third of UK drivers are still not convinced that having a `black box’ telematics-based insurance will bring them any dividends with young drivers standing to gain the most.

A YouGov survey carried out in December revealed that 30% are still not sure how it will benefit them and yet the latest report from risk assessment experts at LexisNexis Risk Solutions, part of a global organisation providing data-led evidence for insurers and other similar businesses, shows beyond question that telematics produces safer drivers.

Being able to prove that you are a lesser risk on the road produces instant and very tangible rewards for the driver in the form of cheaper insurance, and for the country as a whole by not having to pay for any medical treatment and aftercare following an accident.

The report showed that by the end of 2017 there were 975,000 live telematics insurance policies. Comparing accident rates for 17 to 19 year olds between 2011 when black boxes were just starting to appear and 2017, there was a 35% reduction, despite the number of vehicles on our roads growing by 10%, and 7% more licence holders for drivers of all ages in that period.

This is the first time road casualty statistics have been analysed in direct relation to the growth in telematics policies and backs anecdotal evidence from insurers that fitting black boxes has been more effective than other road safety initiatives aimed at the young driver market.

Person inserting a black box into the lower dash underneath the glovebox of a car


How does a black box work?

A `black box’ is essentially a small data recorder which is easily plugged into a little port, normally just under the dashboard. In it is a SIM card which will send a log to your insurer of how you drive, at what time you drive and on what sort of road, be that a twisty rural road, urban route or motorway, and it notes if you take breaks on very long journeys.

The `how you drive’ records parameters like how hard you brake and accelerate which gives a good picture of your behaviour behind the wheel.

With this data the policy provider can build up a profile of your driving and base its next premium on your personal behaviour behind the wheel and the risk you represent; not just relying on the usual and often unfair criteria, such as your age group or the number of claims made from within your postcode.


What are the benefits of a black box?

There are several benefits, but the main ones are cheaper insurance premiums and less worry for family and friends.

As it happens the cost of motor insurance fell fractionally in 2018, down by 1% to an average of £477 according to the Association of British Insurers’ (ABI) latest Motor Premium Tracker, but that is just a national average and younger drivers pay eye-watering amounts.

For the 17 to 24 year old age bracket, the average comprehensive policy in 2018 cost around £1,200 but having telematics dropped that by around £385.

Pink piggy bank with £1 coins stacked up next to it

The very fact that less experienced drivers who agree to have a black box and are willing to have their driving monitored should make them inherently less of a risk and as any parent will tell you, that in itself is worth knowing.

Other factors include being able to track down and recover a car if it is stolen (thanks to its GPS transmitter) and being able to settle a claim faster in the event of a bump because the data can help analysts determine how your car was being driven up to that moment and even whereabouts on the car the first impact happened.


Are there any downsides to black box insurance?

Yes, there can be.  Because driving at night is statistically more dangerous, some policies may impose a curfew between (usually) 11pm and 5am and unless you can prove it was for an emergency there will be a penalty for breaking it.

There will be a cost if you change your car and need the box transferred or if it’s damaged. Check if the insurer charges for the initial installation too.

Your son or daughter may see it as a `spy in the cab’. I don’t agree with that, I think it more a voice of restraint reinforcing the message that the safer you drive, the cheaper it gets and that has to be a powerful argument.


 

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