Telematics Car Insurance
It goes under various names – black box insurance, pay as you drive, smartbox, GPS or UBI (Usage Based Insurance). It’s a new kind of vehicle insurance and the good news is that in some instances, depending on the car use, it can be cheaper than normal insurance. Up to now all vehicle insurance has been based on past records of what groups of drivers in groups of vehicles do — how often claims are made, what for what they are made and how much has to be paid out. Now, that is all set to change.
With an electronic app (on a smart phone) or a piece of kit either built into the vehicle or added afterwards, the precise performance of the vehicle and individual driver can be measured and a premium calculated accordingly. The device finds the safer drivers and rewards them — and that promises a big consumer gain. It also promises safer roads.
How Does Telematics Car Insurance Work?
There is a certain stereotype that all young drivers are reckless drivers and are a big insurance risk. In fact its only a minority of drivers who have serious (and thus extremely expensive) accidents – but all drivers have to pay for them. This can make it very difficult for young male drivers to get an insurance policy at an affordable rate.
Telematics insurance can change this – offering an insurance premium calculated on the individual drivers actual driving behaviour – the mileage covered, the road used and the time used, the observance of speed limits, the smoothness of acceleration and slowing down. Black Box insurance allows drivers flexibility to choose, when, where and how to drive in order to reduce premiums and also to maximize their security (from accidents). The data collected also records the exact position of the vehicle device at any time – useful, for example, to deter theft, though creating a privacy issue which all insurers are addressing.
When some people hear of black box insurance, they imagine that it is akin to the insurance of an aeroplane, but they are surprised to find out later that it is a pay as you drive car insurance that could save them a lot of cash. This kind of insurance relies on small databox (black box) the size of a cell mobile phone fitted into your car by the insurance company. This box does not tamper with the normal car operations nor does it affect the warranty. Moreover less energy is required to power this device (less energy than your car radio) so you shouldn’t worry about your car battery being drained.
What Data Is Collected by the Black Box?
- The distance the car travels
- The period of time the car is used
- The location of your car all times (this is also a security benefit)
- What type roads is the driver travelling in
- Speed and direction travel prior to and after a collision/accident
- The drivers speed
- The drivers braking behaviour
- Force of impact in an accident/collision
- Reports if any accident occurs
How Is The Collected Data Used?
The collected data is analysed by the insurance company and helps them in charging the insurance premiums and a multiplicity of other uses which include:
1. Mileage Policies
The insurance company recognises that some drivers rarely use their cars and if they do, they use them for local or short journeys, or maybe it is because they are trying to save on fuel. Such drivers drive their cars only a few thousand miles a year. The mileage policy is generally suitable for any type of a car where premiums are charged according to the number of miles you drive. If you can save your cost of fuel by reduced car use, why not reap benefits as well of reduced insurance premiums. Thus, those who drive fewer miles, and those who do not use their cars during the rush hours and at night benefit from lower premiums rates.
2. Assess My Driving
Some insurance companies use the black box technology to assess the drivers’ acceleration, cornering and braking and use the information collected from assessment to offer discounts or premium loads depending on the scheme. The drivers need to select and appropriate scheme suitable for your driving pattern so at to reduce the premium costs. Features offered in various schemes include:
• Higher mileage rates charging for use during peak/rush hours;
• Higher mirage rates charges for young drivers during night hours especially during the weekends;
• Higher mirage rates charges on dangerous routes;
• Lower mirage rates charges to the drivers who adhere to speed limits and avoid sharp braking.
3. Accident rescue
In case you are involved in an accident in your car, the black box immediately alerts your insurance company of a sudden alteration in g-forces. The device can also be used as a telephone, thus they call you to check on your status and to establish whether you require any emergency assistance. Moreover, the insurance company can immediately take down the details of the accident, which will hasten the claims process and deter probability of any fraudulent claims by the other party involved in the accident.