Black Box Insurance
Telematics Insurance is known by many different terms including Black Box Insurance, GPS Car Insurance, Smartbox Insurance, Pay As You Drive and Usage Based Insurance (UBI). It is designed to be driver centred and premiums are based on you as a driver, not how you fit into statistical evidence.It also allows insurance companies to makes charges on a driver's behaviour, not on how he claims to drive and goes a long way to protecting good drivers from costs to the industry from false claims from dishonest claimants.It allows drivers flexibility to choose how they drive in order to reduce premiums.
Telematics insurance relies on a databox the size of a mobile phone which is installed by the insurance company into your car. The box does not damage the car and will not affect the warranty; it uses less energy than a car radio so should not drain your car battery.
What Data Is Collected?
Data from this box is collected by GPS, enabling insurers to monitor:
- The distance it travels at those times
- Where the car is located
- On what type of roads the car travels
- Speed of travel
- Braking behaviour of the driver
- Direction and speed of travel before and after a collision
- Force of impact in a collision
- At what times the car is used
How Is This Data Used?
Although few insurance companies yet offer Telematics insurance, the information is used in a variety of ways depending on the scheme. Choosing the right scheme for your driving pattern is important to minimise your costs. Features offered include:
- Making heavy charges for young drivers between 11pm and 6am - particularly at weekends
- Charging higher mileage rates for use during rush hours
- Charging higher mileage rates on particularly hazardous routes
- Charging lower mileage rates for those who avoid sharp braking and keep to speed limits
Advantages Of Black Box Insurance?
Advantages of these schemes are to both low and high risk drivers, for example:
- Young male drivers are statistically more likely to have accidents and 40% of all serious and fatal accidents occur between the hours of 11pm and 6am. By keeping young drivers off the road during these periods, insurers can reduce their risk and young drivers can benefit from lower insurance costs. To curb night-time use, should the car move during the specified hours, a heavy premium is levvied
- Those who travel fewer miles and who use the car outside commuter times will automatically benefit from lower premiums
- Sensible, drivers will build up a history of data to prove it and will benefit from reduced per mile charges, so despite the predicted rise in insurance premiums for young girls, following the EU's recent directive that gender cannot be used to assess risk, girls can build proof ofa pattern of good driving to keep their premiums low
- Assistance with claims management should an accident occur because the insurance company can investigate the incident
- Simplification of recovery of monies due from third parties through provision of proof of accident scenarios
- Helps to prevent theft and fast recovery of stolen vehicles
Other advantages can include online dashboard reporting which allows you to:
- Keep an eye on your total mileage and costs
- Keep all your documents online
- Receive notification of when MOT, tax and insurance is due
- Calculate what situations increase your risk so helping you to drive more safely
- Allow you to see when you are driving most economically should you wish to reduce fuel consumption
What Are The Disadvantages?
There are some disadvantages to these schemes: Fast, high mileage drivers who spend 90 minutes travelling at rush hour each day are likely to have nothing to gain from them; for those who underestimate their annual mileage, or whose driving patterns change during the year, there is the uncertainty of how much the insurance will cost.
How Are Much Do They Cost?
Pricing varies with each insurance product, but pricing includes the following general principles:
- There is an initial premium cost which varies between companies
- There may be additional cost or no cost for the box to be installed
- Companies may charge for removal of the databox on termination of insurance, some remove it for free and others leave it in situ
- When a car is sold, the box may be left in place to allow a new owner to benefit from it
- Mileage rates rise and fall dependent upon where and when journeys are made
- Some companies will only be interested in keeping the young off the road during night-time hours
- Some companies offer mid-term cash back for those who have been proven to be low risk drivers
- Reduction or increase in the renewal annual premium may be offered depending on the driver's risk profile based on data collected during the year