What is a black box in car insurance?
Black box car insurance is also known as telematics car insurance or pay-how-you-drive car insurance.
It is a type of policy where your driving is monitored and used to set your premium.
Your age, occupation and where you live are also used to calculate the risk and car insurance premium.
It is considered more transparent than conventional car insurance policies, which rely on vague and opaque pricing and algorithms.
How does black box car insurance work?
Black box car insurance devices use GPS technology to monitor a motorist’s driving habits to create an accurate risk profile.
Black boxes monitor and record the time of day / night you drive, type of roads used, mileage, speed and how the car is handled by brakes, turns and road positioning.
This information is used to gauge a motorist’s driving style and score, which is used to assess next year’s insurance premiums.
Safe drivers are often rewarded with premium discounts, refunds and perks such as extra miles and retail vouchers.
Is it worth getting black box insurance?
Black box insurance is cheaper for many motorists.
First-time drivers or those who have only held a licence for less than 3 years are likely to benefit most, with premiums potentially up to 50% less than those without a black box device.
Black box car insurance policies are cheaper for 78% of 17 – 20 year-old motorists and 69% of those aged 21 – 24 compared to standard car insurance according to analysis by Compare the Market.
What are the benefits of taking out black box car insurance?
A black box car insurance policy seems like a much fairer way of calculating a motorist’s risk and premium.
Benefits include:
Reduced premiums for safer drivers
Driving carefully will result in you paying lower premiums.
Cheaper insurance for convicted drivers
Conventional car insurance policies gauge the risk and premium on your previous driving history. A black box policy focuses on your current driving style, so it may be a cheaper option.
It is ideal for motorists who are perceived as high-risk, such as new and young drivers
It provides reliable and consistent feedback to help improve driving skills.
Theft deterrent
Black boxes are also tracking devices which use GPS technology, so they can help locate stolen vehicles.
Black boxes can also assist and identify who is at fault on collision investigations
A black box can identify in an insured driver was speeding, accelerating or braking as well as force of impact. This evidence cannot be disputed, which is an advantage.
What are the disadvantages of taking out black box car insurance?
The black box records and sends a lot of driving data to your insurer about the journeys you make and your driving habits.
Fast acceleration, harsh braking, poor cornering or road positioning and regularly exceeding the speed limit will likely lead to higher insurance premiums.
A malfunctioning black box may result in your car insurance policy being cancelled in error
These must be declared for the rest of your life, even if you prove that it was faulty data which caused it.
Black boxes cannot identify who is driving the car
You may be a careful driver, but others who are insured to drive your car may not be as careful. This could increase your insurance premiums.
Privacy concerns
Many motorists will not like being monitored day and night with everything they do being recorded and passed on to insurers.
Enforced curfews
This can affect motorists who work shifts and unsocial hours.
Mileage and distance restrictions
This may affect those who drive higher mileages and longer distances for commuting and other activities.
Extra charges including installation, removal or black box transfers.
Constant apprehension knowing that everything they do behind the wheel is being monitored and recorded.
Black box devices can malfunction, break and mis-record information
The black box devices are not fool-proof. They can malfunction and mis-record data.
The Financial Ombudsman Service (FOS) regulates the car insurance industry and has received complaints from motorists who believe that the data recorded was not accurate.
Auto Express found case studies where insurers claimed that one motorist drove at 106mph in a 30mph limit for a significant length of time. The black box also wrongly identified a local road with a 60mph speed limit to be a 30mph zone.
The records indicated from the location of the alleged incident, she would have covered 120 miles from her home in less than a minute.
Clocks changing to British Summer Time have also caused inconsistencies.
The Financial Ombudsman ruled on a policy where a consumer had her policy cancelled after being recorded driving at 125mph in a small hatchback during the rush hour.
Your consumer rights
You are entitled to access the data held as this belongs to you under the General Data Protection Act (GDPR) 2018. You would need to submit a Data Subject Access Request (DSAR) to the insurer, who has up to one month to provide you with the data.
The Consumer Rights Act 2015 also applies. These devices ought to be fit for purpose, as described and satisfactory quality.
The black box forms part of the insurance policy and the data recorded affects your future insurance premiums.
Any defects can have a significant impact on your insurance premium for years to come if it led to increased premiums or a policy being cancelled through no fault of your own.
You would need to follow the complaints process to seek a remedy. Insurance policies are a regulated product by the Financial Ombudsman Service (FOS), so they can intervene as a last resort. You would need a deadlock letter (final decision) from your insurer to refer a complaint to the FOS for consideration.
Finally
I made a ‘no fault’ claim a few years ago where my car was destroyed by a third party driver and I couldn’t fault how it was handled.
You are likely to get a better deal if you bundle your car and home policies.
What are your thoughts on black box insurance policies? What are your experiences? Would you consider it?
