How black box car insurance works

What is black box 'telematics' insurance?

Black box insurance, also known as telematics, is a type of car insurance policy that calculates your premium based on the way that you drive.

Our short video explains what it is and how it could save you money:

How does black box telematics insurance work?

Black box insurance makes use of technology to track how you're driving, or how much you drive. It means the insurer can give you a more accurate price.

Depending on the policy, this technology can take the form of bulky GPS devices that require professional installation, matchbox-sized trackers that plug into your car's dashboard, or tags that you can simply stick on your windscreen. 

Some don't require any black box at all – instead tracking your phone or using it to remotely access your car's mileometer.

Each insurer will have slightly different metrics for deciding how safe a driver you are, but most will take into account the following:

• braking
• cornering
• steering
• speed
• the times you drive
• mileage

Whether you're young or not so young, black box policies aren't the only way to start chipping away at your insurance premiums. For more on that, see our guide to how to find cheap car insurance.

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How do black box telematics insurers reward good driving?

Black box insurers can reward you in a number of ways including:

• discounting your premium if you have a track record of safe driving
• bonuses, such as retail vouchers
• money back off your premium

Policies that are based on mileage – where there's a limit on how much you can drive – often have bonus miles as rewards that are dished out monthly or quarterly.

Telematics technology brings additional perks. Black box policies let you review your driving over time, helping to identify where you could improve. In some cases, black box technology can also be used to help trace your car if it's stolen, or provide evidence to support you in a claims dispute.

However, there are also penalties if you drive badly. Some providers could increase your premiums, while others may cancel your cover altogether if you perform poorly or are frequently caught breaking the speed limit.

Black box car insurance for younger drivers

When telematics policies first emerged, they were aimed squarely at young or inexperienced drivers. Typically, young drivers – particularly those under 25 – pay much more for car insurance than other groups.

The reason for this is that young drivers, on average, claim most frequently and make the costliest claims.

But if you're a young driver who drives more safely than the average young driver, then black box policies should, on paper, recognise this and provide you with a fairer price.

• Find out more: compare the best UK car insurance policies

Black box car insurance for drivers with low mileage

Telematics policies have since expanded their appeal to drivers of all ages.

Insurers such as By Miles and the RAC, for example, have launched policies aimed at customers who drive fewer miles than average. 

Providers may charge per mile, plus an annual or monthly fee to cover your car while it's parked.

If you need to use a car for a short time, rather than occasionally throughout the year, consider taking our a short-term car insurance policy; some providers charge per hour.

Pros and cons of black box car insurance

On paper, black box insurance seems like a much fairer system of calculating car insurance, but it's not without drawbacks.

Most obviously, some drivers may object to being constantly tracked by their insurer.

Here are some of the pros and cons of black box insurance:

Pros

• Good driving can lower your premium
• Stolen cars can be located
• Encourages safe driving
• Suitable for younger, older and infrequent drivers

Cons

• Bad driving will result in higher premiums
• Can incur extra charges
• May not suit frequent drivers
• Could restrict your driving habits

Other ways to get cheap car insurance for young drivers

If you're a young or inexperienced driver, you're probably facing sky-high premiums. Black box policies may help you reduce these, but there are other ways to reduce your insurance costs.

Stick with a cheap-to-insure car

Insurance is a significant cost of running a car and the type and model of car has a significant bearing on the premium. 

For example, for younger or inexperienced drivers, cars with lower-horsepower engines are likely to be much cheaper to insure than high-performance models. So before you buy a car, it's sensible to run an insurance quote for it to check how much you'll have to pay.

• Read Which?'s car reviews to find the right new or used car for first-time drivers

Find ways to reduce risk

Insurers think that because you're young, you're going to have prangs left, right and centre. So take steps to show them that you aren't as risky as they think. This could include:

• avoiding modifications to your car
• choosing a car with a small engine
• cutting down mileage

Add a named driver to your policy

If you add an older and more experienced 'named driver' to your policy, the cost of cover is likely to fall. However, it's illegal to put someone down as the main driver if this is not the case.

This practice is known as 'fronting'. It's a form of fraud, and if your insurer finds out it may refuse to pay out on a claim and could also cancel your policy. The insurer may also take legal action against you for fraud.

Add a voluntary excess

The excess should reflect the amount you can afford to pay without the insurer's support. The higher this is, the lower your premium will be. Remember, though, that policies almost always come with compulsory excesses beneath the voluntary one you can choose. So check that you're comfortable with what the total of these is.

• Find out more: How to find cheap car insurance 

How much does black box telematics insurance cost?

Like traditional car insurers, black box insurance companies charge a number of fees. The following factors could affect how much your black box car insurance policy could cost.

Change of vehicle

If you buy a new car and want to continue using your black box, some providers will charge you a fee for the privilege.

Missed installation

When you sign up for a black box policy that needs an engineer to install it, an installation date will be arranged. If you miss the date, it's likely you'll incur a fee.

Box disconnection or removal

If you no longer want a black box policy and don't renew (or you cancel your policy mid-term), most providers will not ask you to have the box removed; they'll disconnect it remotely instead. However, you could be charged if you decide that you want to get rid of the box.

Traditional car insurance fees

As well as the fees listed above, black box insurers charge many of the same fees as traditional car insurers. This includes interest if you pay monthly, mid-term amendment fees and early cancellation charges.

If you opt for black box car insurance, make sure you read the terms and conditions carefully before you sign up. This will help you avoid any nasty surprises if your circumstances change mid-policy.

• Find out more: the insurers with the highest and lowest fees

Is black box telematics insurance cheaper?

Black box car insurance is not always cheaper than traditional car insurance.

It's best to check the cost of both when shopping around, especially if you're struggling to find affordable car insurance.

Make sure you understand your policy document and check it carefully – particularly on how your policy might reward you for good driving and penalise you for bad habits.

Black box insurance: your questions answered

Is black box insurance only for younger drivers?

When it was first launched in the UK, black box car insurance was mainly aimed at young drivers, as they pay much more than the average motorist for cover.

Black box car insurance has since opened up to a wider range of people, but some policies still only cover younger drivers.

What happens to my data with black box insurance?

For black box insurance to work, your insurer constantly tracks your behaviour behind the wheel to see how you drive.

This has led to some concerns about the security of your data, but data protection laws mean that your driving data is protected.

Your data may be shared with third parties who work with the insurer, such as claims professionals. And your data may be handed over to the police if they have a court order asking for it (or if you give the police permission or are suspected of fraud).

Will I have a curfew?

It used to be relatively common for black box benefits to be conditional on customers not driving at certain times at night. Hard curfews are less likely to feature in policies now.

However, in combination with other factors – such as speeding, braking and cornering – some policies will still consider the times you tend to drive when reviewing how safe a driver you are.

How can I monitor my own driving?

Black box car insurers send you frequent feedback so you can monitor your driving performance. They will pick out trends that affect how your premium is calculated. 

This feedback is accessible online. Some providers offer smartphone apps that also give you access to your driving data.

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