Black Box Insurance: Step by Step

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Telematics insurance policies are different to standard insurance policies and taking them out involves a few more steps. Don’t let this put you off though: while a little more work is required, all the steps and simple and the amount you’ll be saving will more than make up for that little bit of extra effort.

Choose a policy

There’s currently a wide choice of telematics providers offering a variety of different policy formats. Unlike non-telematics insurance where you’ll typically go for whichever insurer offers the best quote on premiums at your preferred excess amount, with telematics there’s a few more things to consider. Firstly you need to choose which kind of telematics policy is suitable for you:

Option 1: Telematics based only on mileage

Mileage based telematics policies use the GPS in the telematics device to track how much you drive. These policies typically charge based only on mileage, although some may charge less after you reach a certain number of miles (similar to some electric and gas suppliers).

These policies are best for those who don’t drive far or often, as your premiums will be cut substantially. After all those who aren’t on the roads much have far less risk of being involved in an accident.

Option 2: Driving performance based telematics

The policies that offer the best discount take into account how you drive. These use a combination of GPS location data with information from the car on how you accelerate, steer and brake.

Premiums typically go up or down based on your performance. If you’re a great driver you’ll likely have substantial reductions in premiums with this form of telematics insurance.

Other considerations:

Some telematics policies have other constraints such as curfews which are designed to offer lower premiums by banning driving at times associated with drink driving accidents.

There’s also some traditional car insurance policies that offer discounts for using smartphone apps that act a little like telematics boxes but only test a small number of miles. The discounts aren’t as big, but it means you’re not constantly being monitored by your insurer.

Installing the device

Once you’ve signed up to an insurance policy that suits you, then next step is to get the telematics ‘black box’ installed. The process of doing this changes from insurer to insurer.

Some insurers will insist that they’re mechanics come and fit the device for you. Others will give you an option of choosing someone from an approved list. Some will let you decide who fits your device, and even allow you to fit it if you’ve got the necessary skills.

The installation typically takes less than an hour and if you need to pay for it will cost around £50. If you need to buy a telematics box the prices really vary between models, but most insurers will provide the box for free.

Monitoring your driving

Most telematics insurers will offer an online dashboard where you can monitor how you are driving. This dashboard will also allow you to purchase additional miles on mileage based policies.

Alerts from the insurer will be sent to you here about your driving performance, so it’s important to check it regularly. If you receive a message to improve your driving and fail to do so then your insurer will increase your premiums.

Driving carefully means ensuring that you brake and accelerate steadily rather than rapidly. It means steering gently and keeping good road position. Keeping your eyes on the road and planning ahead is the best way of going about this. Making sure you drive within the speed limit, even on roads where a lot of people ignore the limit, is vital to keeping premiums down.

Cutting out unnecessary driving can also help. If the local shop is only a five minute walk away then driving there isn’t worthwhile and could potentially increase your premiums slightly on mileage based policies.

Conclusion

Each telematics policy monitors driving in a different way and will alert you to different aspects of your driving. Almost all take an overall view of your driving performance rather than punishing you for individual incidents of bad driving. Remember when you’re due for a renewal to check if your current telematics policy still offers you the best premiums based on your driving performance.

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Robert Prime launched telematics.com in early 2013 and has over 10 years experience in the financial sector. He specialises in business startups and online marketing with a passion for new technology.