Telematics Insurance Explained

Published 21 June 2022

• What is telematics insurance?
• Who should choose telematics insurance?
• How does telematics insurance work?
• How To Get a Good Telematics Score and Save Money
• Advantages of telematics
• Disadvantages of telematics

What is telematics insurance?

Telematics insurance commonly also referred to as black box insurance is a type of car insurance which sees a small device (black box)  fitted out-of-sight in your car and it measures how well you drive in order to reward safe drivers with discounted insurance.

Who should choose black box insurance?

Telematics, or black box insurance, could help you become a safer driver, which in turn, could help lower your premium. And if you’re a higher risk driver, such as a young driver or a driver with convictions, telematics insurance might be a suitable alternative to traditional car insurance.

How does telematics insurance work?

When  choosing telematics insurance you must be happy to have your driving constantly monitored by the insurance company.

Conventionally,  insurance companies base premiums on factors such as the vehicle’s insurance group, the age of the driver, their experience and history on the road.

These factors do play a part in telematics, but rather than just relying on statistics for all drivers in an age group,  insurers use electronically-gathered data to calculate, and recalculate, your quote based on how good a driver you are – and accurately calculate its risk.

If you take out a black box policy a small ‘black box ‘device will be fitted in your vehicle . Some providers make use of a phone app or a device that plugs into your car’s power outlet (cigarette lighter).

The device is covered in sensors and has GPS technology to record and transmit information to your insurance provider – such as:

• Your car’s location
• The times of day you use your car
• Distance travelled per journey
• Your speed (the black box can determine if you are speeding by cross referencing your speed with the road you are driving on and the known speed limit)
• How hard you use the brakes
• How hard you use the accelerator
• How sharply you corner

Driving Score

The driving data is converted into a score.  A good score indicates you are seen as low risk and will  reduce your insurance costs, but a bad score indicates you are at a higher risk of having an accident so your premium will go up.

You can monitor the score by logging into your account on your insurance company’s website.

Monthly Payments

Telematics insurance policy is paid for monthly, so a month of good driving can balance the costs if you had a bad score the previous month.

How To Get a Good Black Box Score and Save Money

• Reduce your mileage (the less miles you drive the risk of an accident is reduced)
• Drive on safe roads (motorways are generally safer than A or B roads)
• Reduce night driving (visibility is better in the day reducing risk)
• Brake gently
• Accelerate gently
• Corner gently
• Drive according to the speed limit. 

Some insurance companies offer free coaching services to people who need the help. According to Direct Line, drivers who used its coaching service improved their driving score by 30% on average. 

Advantages of Telematics

• Get reduced insurance premiums if you are a safe driver.
• The costs of telematics insurance are usually cheaper than a conventional insurance policy as long as you drive safely.
• Getting feedback on your driving can help you become a better driver
• Young drivers can get cheaper insurance premiums
• The black box can prove you are driving within the speed limit if you ever need to prove it
• If your car is stolen the black box can help track it down

Disadvantages of Telematics

• Some policies do not allow driving late at night and in the early hours of the morning, due to the increased risk of accidents.
• Some policies will penalise you for night driving.  So if you have to regularly drive at night telematics insurance might not be right for you.
• You must stick to your annual mileage otherwise your premium will go up.
• Bad driving will increase your monthly insurance premium through hard acceleration, cornering sharply, breaking heavily, speeding etc.