What is teleamatic insurance? Black box insurance explained:
Black Box Insurance, or Telematics Insurance, is a new type of vehicle insurance that is becoming increasing popular, especially with new drivers. It boasts cheap rates and helps new drivers get into good driving habits which they are likely to keep.
What does a black box do?
A little black box is installed into your vehicle which sends information to your insurer about your driving. They can see what time you drive, how fast you going in different speed limit zones, the rate of your acceleration and breaking and much more.
Your driving is then rated, which can be seen by logging into a dashboard online. If you always have a high score then many insurers will reward you for being a safe driver. This includes money off your premium.
However it also means that they may cancel your insurance if you don’t drive in a way to meet their standards. If you speed constantly, drive really late at night all the time or always brake quickly then you could see your insurance being cancelled. This will end up costing as many insurers will also charge you a cancellation fee.
The rise of Telematics Insurance.
Telematics insurance is becoming increasingly popular and not just in young drivers. BIBA reported earlier this year a 25% increase on telematics insurance policies compared to 2015, with over 750,000 live policies.
The first and biggest reason as to why it is so popular is the price. Telematics insurance policies are by rule a lot cheaper than regular insurance, especially for younger drivers. Young driver’s premiums are known to be extremely pricey, with some only able to afford to be on the road as a result of having a black box installed in their car. The reason for the cheaper rates is because as the insurer can monitor the driving the driver tends to be safer. Therefore they are less likely to have an accident, lowering costs for insurers which lowers premiums for drivers.
Marmalade, a company who specialise in black box insurance explained just how safe their customers are. They compared young telematics drivers to young drivers with regular policies. They found that on average 1/6 young drivers with regular policies are likely to crash. in comparison only 1/16 of telematic drivers are likely to be involved in an accident.
Why people aren’t convinced
A lot of people aren’t convinced by black boxes helping to make insurance cheaper. There have been reports to the BBC Watchdog of errors leading to policies cancelled. Drivers have been reported to be speeding, in cars that cannot even reach the speed stated. This has led to their policies being cancelled, as well as having to pay a cancellation fee. Additionally there is the cost of setting up a new policy.
Are you a fan of telematics insurance? Think it’s a waste of time? Let us know in the comments below.
Read our blog disclaimer here.