Black box insurance: what is it and what are the benefits?

Last updated May 26 2021

Black box insurance, otherwise known as telematics insurance, is a type of car insurance offered by some insurance providers. It involves the insurer installing a tracking device, the black box in question, in your car and can result in a lower overall insurance premium.

Choosing black box insurance can be beneficial to new or young drivers with little experience or no NCD (no claims discount), helping to keep their premium affordable until they become less risky to insure.

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How black box insurance works

The tracking device, or black box, that gets installed in your car as part of black box insurance monitors your driving using GPS and scores you on areas such as braking, cornering, speed, mileage, and the time of day you drive. This data is recorded by your insurer and used to assess your risk profile in more detail. You may be sent updates from the insurer on your scores – some offering suggestions for improvement and others providing information on what factors you score highly in.

Your score can then affect your premium price. Generally, the better and safer your driving the cheaper your premium will be. Some insurers will send warnings if you are consistently driving badly and can even cancel your insurance if you fail to improve.

Who is black box insurance suited to?

Black box insurance can benefit young drivers under 25 years old or new drivers of any age with no established No Claims Discount. These are the groups of people that insurers may see as ‘high risk’, but black box insurance allows you to prove to the insurer that you’re a safe driver through ongoing monitoring of your driving.

What are the benefits of black box insurance?

There are many benefits to choosing a telematics policy, particularly if you are a young driver or somebody with little driving experience. These include:

  • It can sometimes be cheaper for new drivers as you are able to demonstrate safe driving.
  • You may be rewarded for good driving or getting a high driving score.
  • Your car can potentially be located if it has been stolen thanks to the built-in GPS of the black box.
  • Telematics policies could encourage safe driving.

What information is collected by a black box?

  • When you drive – Statistically you are more likely to be involved in an accident in peak times and rush hour. Reported by insurers 43% of accidents happen during peak times (2019).
  • Where you drive – Different journeys present different challenges. For example, an insurer may see you as a higher risk if you drive more often on country roads than on motorways.
  • Your speed – The black box will measure your speed and ensure you adhere to speed limits.
  • How you drive – Your black box may monitor other data such as how harshly you brake, how quickly you corner and more.

Black box insurance rules

Some telematics insurance policies also have specific rules you will need to follow, as well as driving safely. These may include:

  • Not surpassing a specific mileage allowance - The insurer may only allow you to travel a certain number of miles per year as part of the policy, however, this can also be used as part of a benefit scheme in which some providers will offer more miles for good driving.
  • Not driving at certain times of the day - Some providers will enforce a curfew on your driving, which is due to accidents being more likely late at night or early in the morning. Limiting your driving during these hours reduces risk.

Black box installation and removal

Black boxes can be fitted to any car and model. Some companies may include an installation fee and send someone out to install the box for you. However, some may post the telematics device with instructions for you to install it yourself. In either case installation should be straightforward.

When your policy has expired and you no longer require your telematics device to be installed, your insurer will either send somebody to remove the device or provide instructions on how to do so yourself. If you have a device that you’ve installed yourself, some insurers may require you to post it back to them.

Is black box insurance for you?

Finally, the question you’re probably here for, is black box insurance for you? If you drive often and go on long journeys, or if you travel during peak times, telematics insurance may work out more expensive than a regular policy for you.

However, if you are a young driver (under 25) and travel shorter distances; black box insurance may benefit you. As with all types of car insurance, it’s best to compare policies and assess the cost of each with the features. There are so many variables that affect the cost of car insurance that it’s impossible to say which policy is right for any one person.

If you’re thinking about black box insurance because you’re looking to reduce your insurance costs, you may also want to consider third-party only insurance. These policies are generally cheaper than the alternatives, but it’s important to remember that they only cover damage to another person’s property in the event of an accident.