Black box in cars
Telematics car insurance - also known as black box insurance, GPS car insurance, smartbox insurance, pay-as-you-drive insurance and usage-based insurance - works either through a small black box device that's fitted to your car or a mobile phone app which can collect the following type of information:
- The speed you drive
- Braking and accelerating habits
- Distance travelled
- Time of day you travel
- Types of roads you travel on
Your premium will be calculated depending on the data gathered, with drivers who meet or exceed the agreed criteria benefiting and those who don't suffering.
Furthermore, if you have a black box it can act as a tracking device, so if your vehicle is lost or stolen, you (or the police) can find it sooner.
Some policies will give you access to an online dashboard where you can review your driving and learn to improve it.
Telematics has traditionally been seen as an attractive option for safe, young drivers looking for affordable premiums, but it has the potential to offer benefits to good drivers of any age - you can read more about telematics for experienced and older drivers
How does telematics work?
Your insurer will either ask you to use a mobile phone app, or will install a small device known as a 'black box' on your vehicle.
A black box is typically about the size of a smartphone and should be installed discreetly, perhaps under the dashboard.
The app or black box will use telemetry and satellite technology to record and transmit data about your driving habits back to your insurer.
What sort of data is captured?
Different companies will be interested in different things and will monitor and measure your driving accordingly, but typical things would be when and where you're driving; the type of road; how fast you're going whether you're within speed limits; how forcefully you apply the brakes; how you take corners.
Some telematics policies will give an initial bundle of miles as a kind of driving 'allowance', but may penalise you if you go over that limit.
With such policies, more miles can be purchased should they be required, while certain providers will reward safe driving with an additional mileage allowance.
Fairness and price may be seen as benefits of telematics policies - your premium will be based on your driving skills and habits, thereby benefiting some groups and penalising others.
Rather than waiting for renewal to see the benefits of good driving, your premium price may be reassessed on a more regular basis, perhaps every few weeks or months.
Beyond price and fairness, a black box device (which may be installed for free, or for a small fee) can help to track a vehicle if it's stolen - stand-alone security tracking devices may cost several hundred pounds.
There may also be benefits in the event of an accident. Some telematics providers will receive an alert if this happens and - if your car is stationary - they may try to contact you on your mobile phone to check that you're ok.
If the data collected suggests a more serious collision, the insurer can alert the emergency services.
Information gathered from an accident or incident can also be used in the event of an insurance claim, providing an impartial source of data that, it has been suggested, will help to cut the spiralling cost of insurance fraud.
Some policies will offer an online portal for you to study - and, hopefully, improve - your driving skills.
This could potentially be used by parents to monitor the driving behaviour of their newly qualified motoring offspring - although it's possible that the child will not see that as a benefit!
The negative side of telematics
As already noted, the fact that premiums will be based on driving skills and habits will negatively impact on some motorists.
While there may be little sympathy for dangerous and unsafe drivers, depending on the policy you may also be penalised just because you regularly drive to work during rush hour, or late at night.