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Black box insurance pros and cons

Mar 2, 2021

Opting for black box insurance could save you money – but what’s the catch? Let’s look at the pros and cons of allowing your insurance company to monitor your driving style.

What is black box insurance?

Most insurance policies look at a driver’s key characteristics to develop an overall risk profile, and the cost of premiums is based on this. Statistical databases are used to work out which characteristics indicate that someone is more likely to make a claim – for example, being younger, driving a powerful car or living in a high-crime area. You may pay more if you have one or more of these risk indicators.

For young drivers, the cost of insurance can be considerable. This is because the statistics show that younger drivers, whether through inexperience or a more risk-taking attitude, make more claims than older drivers. One in five drivers crash their cars within one year of gaining a licence and 4,000 young drivers are killed or seriously injured each year in the UK.

However, young drivers are not all the same. Telematics insurance enables drivers to demonstrate their care and skill by inviting the insurer to track key elements of their driving. Once the insurer has data showing how carefully the person has driven, premiums can be reduced to reflect the actual risk rather than the law of averages.

Telematics insurance is popular with young drivers as well as other groups that are seen as high risk, including older drivers and people with a history of driving convictions.

Telematics insurance enables drivers to demonstrate their care and skill by inviting the insurer to track key elements of their driving.

How does black box insurance work?

Black box insurance uses a telematics device to record key elements of how a car is driven. The small gadget is fixed to the car 12V plug, usually in the central console, and logs things like mileage, speed, rapid acceleration or harsh braking, taking corners sharply and whether you drive late at night.

The telematics device uses GPS technology to record the vehicle location. Data is shared with the insurer and the driver can also monitor performance using a smartphone app. These apps can help you improve your driving skills by giving you tips and advice.

It’s easy to set up this type of insurance. You obtain a quote which looks at your risk characteristics and calculates a premium price. You are then sent the telematics device which goes in your car. You then install the app on your smartphone and you’re ready to go – you can follow your progress and your insurer will calculate a price for you at renewal based on your behaviour over the previous year of driving.

The pros of using black box insurance
  • The ability to reduce the cost of your car insurance

This is the most obvious reason why people decide to buy telematics insurance. Using a black box can cut your premiums considerably, and if you’re a young driver this could mean the difference between affording car ownership or being priced out.

  • The chance to improve your driving skills

We might like to think we’re careful drivers, but there’s nothing like the added incentive of knowing that sloppy driving could lead to a direct increase in insurance costs. Having a telematics policy can give you a helpful nudge to embed positive driving behaviour, forming lasting habits.

  • The ability to track your vehicle if it’s stolen

A black box device records where your car is at all times. This is not welcome news to would-be thieves, who will often think twice about stealing a vehicle with signs saying a black box device is fitted inside. If your car is taken, the GPS system can be used to locate it rapidly, making it much more likely that your property will be returned to you and the culprits caught.

  • Protection if you have a crash

An often-overlooked feature of telematic insurance is the protection you may receive in the event of a collision. Telematics devices can send an automated alert to emergency services if you are involved in a crash, confirming your exact location. This can even be a lifesaver if you are unlucky enough to be involved in a serious incident.

  • Proving yourself to be a good driver

It’s not unusual for parents to chip in when their kids buy a first car, whether it’s covering the cost of the vehicle or expenses such as tax, MOT and insurance. It’s natural for parents to worry about the risk of their adult child being involved in an accident, but sharing data from the black box smart app can help reassure mum and dad that you don’t go crazy on the road as soon as their backs are turned.

  • Support in an insurance claim

After road incidents there are often rival accounts of what happened and who was at fault. Data from black boxes can be used to help support your side of the story – for example, confirming that you swerved or braked. This can make insurance claims much swifter and easier to resolve.

Using a black box can cut your premiums considerably, and if you’re a young driver this could mean the difference between affording car ownership or being priced out.

A young driver pushing the indicator stalk whilst in their car
The cons of using black box insurance
  • You have to drive carefully

If you have a risk-taking attitude or poor driving skills, your premiums could work out higher with telematics insurance as the black box will highlight these things. Perhaps you already know your faults behind the wheel. Or perhaps you think your driving is fine as it is? A black box can help highlight where improvements could be made. Attending an advanced driving course, like a Pass Plus course, might be a good idea, too.

  • You may need to alter the times you drive

Telematics insurance won’t stop you leaving your driveway, but you might need to drive differently if you want to maximise your cost reduction. For example, if you make lots of journeys in a day or head out late at night, this could increase your risk of having an accident. This might mean black box insurance is not for you if your job involves working at night or making lots of regular trips.

  • All named drivers have to be careful

The black box device doesn’t switch off when your other named drivers get behind the wheel. If someone else is insured to drive your vehicle, you need to be sure that they will also drive carefully in order to get lower premiums.

  • Mileage limitations

Some telematics policies impose a limit on the annual mileage you are permitted, with added costs if you exceed the agreed distance. It is worth thinking carefully about your annual mileage before taking out a policy – for example, if you have a long commute or regularly make long-distance trips, telematics might not be your best option.

  • Privacy concerns

For some people, the feeling of having your movements tracked and logged just feels a bit unnerving. But insurance companies go to great lengths to keep all customer data private and secure.

If someone else is insured to drive your vehicle, you need to be sure that they will also drive carefully in order to get lower premiums.

A car driving along a windy road in the country side
Misconceptions about this type of insurance

There are some questions you might be afraid to ask your insurer about telematics insurance. For example, drivers are often concerned that an insurer could report them to the police for driving errors such as exceeding the speed limit. Insurers do not proactively report their policyholders in this way, although if police are investigating an incident they may ask to look at the data, as they would in a non-telematics claim.

Smartdriverclub only shares data with the police if required to do so by a court summons. It should be noted that the device cannot be relied upon to provide evidence to the degree of accuracy courts would require.

You might be concerned that poor driving will mean you end up paying an exorbitant rate for insurance, which is not the case. With telematic insurance, your premium for the first year is a starting point that can then be reduced according to your proven risk profile. Your insurer will not increase your premium cost during the policy period, although in a worst-case scenario if your driving is dangerously bad, your policy may be cancelled.

The whole point of insurance with a black box is to reduce your premium based on your driving record, not to penalise you by adding extra costs. If you decide to opt for a different insurance provider at renewal, your telematics insurer will not disclose your driving behaviours to the new insurer.

Another common concern is that the telematics device will affect the performance of your vehicle or interfere with the car warranty. This is not the case. Smartdriverclub’s Smartplug is designed to only draw a minimal amount of power from the 12V port, less than you would use to charge a mobile phone.

Black box insurance generally delivers the best value for drivers who are young, newly qualified, careful and have low annual mileage. It is also helpful if you mainly drive in the daytime. If you are an experienced, careful driver, with a substantial no claims bonus a regular insurance policy may provide better value.

Smartdriverclub only shares data with the police if required to do so by a court summons. It should be noted that the device cannot be relied upon to provide evidence to the degree of accuracy courts would require.

A car driving on a busy motorway at sunset
What are the key risk factors for younger drivers?

There are certain factors that increase risk for young drivers. If you are a novice driver, you might want to think twice about these behaviours to make sure you don’t end up becoming another statistic. Whether your insurer knows about your risk taking or not, you need to do all you can to stay safe.

Driving with passengers is a key indicator of risk for young drivers. According to road safety charity Brake, newly qualified drivers with a full car of passengers in the same age bracket are four times more likely to be in a fatal crash than when driving alone. If the passengers are older people, the risk level drops. The excitement and peer pressure of being with friends can make drivers drop their guard and take unnecessary risks.

Driving at night is also risky, partly because drivers are more likely to be under the influence of drink or drugs at this time – even if you are stone-cold sober, other motorists might not be. When it’s dark and the roads are quiet, it’s easy to become drowsy, stop paying full attention to the road or drive too fast – all risk factors in their own right.

Younger drivers are more likely to be distracted by mobile phones while driving. An RAC survey found that half of all people aged 17-24 admit to using their phone behind the wheel, the highest proportion of any age group. Younger drivers are also less likely to use seat belts and ensure passengers also use them, increasing the risk of injury in the event of an accident.

The human brain is not fully developed until an individual reaches the age of 25. Compared to older drivers, young people are more likely to be impulsive, judge risk poorly, fail to anticipate risk or be distracted. A newly-qualified 17-year-old driver is almost twice as likely to be involved in a road accident as a newly-qualified 60 year old.

The good news is that, once you gain experience in those tricky first few years on the road, drivers rapidly gain skill and judgment that helps to reduce their risk. Telematics can be an invaluable tool to help steer drivers through the early days of driving and create good habits for the future.

If you are a novice driver, you might want to think twice about these behaviours to make sure you don’t end up becoming another statistic.

A person driving with their hands firmly on the steering wheel
Is this type of insurance right for you?

If you’re interested in telematics insurance, why not get in touch with Smartdriverclub? Our policies provide the full range of cover you would expect, including windscreen cover, personal injury cover, 30-day European cover, courtesy car cover, personal belongings cover, fire and theft cover, in-car equipment cover, and child car seat cover.

In addition, with Smartdriverclub you can choose to add optional extras such as breakdown cover, replacement car, motor legal protection, keyback cover, and personal accident cover. You also get 24-hour theft tracking, 24-hour claims and accident detection and assistance and advice on smart ways to maintain your vehicle.

Smartdriverclub’s SmartPlug device is easy to install and there’s a helpful online guide to troubleshoot any problems you may have.

Why not get in touch for a quick quote today?