The complete guide to saving money with black box car insurance

Young driver
October 2, 2015

Who doesn’t like the idea of saving tons of money? *cue everyone’s hands shooting up*

Well, the good news is that the ‘idea’ of making a useful monetary saving can quickly translate into the reality of saving tons of wonga in some cases today. Think along the lines of using balance transfer credit cards, switching energy suppliers, using discount/voucher/coupon websites, participating in work car-sharing pools, growing your own fruit and veg, insulating your loft/home, the list is almost endless.

Let’s face facts, there’s no better feeling in the world than saving money. The thing is it’s not very often that the words ‘insurance’ and ‘money-saving’ can be found in the same sentence. Or indeed, paragraph, chapter or essay for that matter. Yet having said that, car insurance – arguably the least customer-friendly in terms of saving money – is currently at the surprise vanguard of this penny-pinching movement, believe it or not.

Motor insurance policyholders have the advent of black box technology to thank for this revelation of recent times. Yes, in a world gone tech mad, it’s the emergence of a little, otherwise non-descript black box device which systematically makes car insurance premiums more affordable than ever before, at least for the younger and inexperienced amongst motorists out there.

Historically extortionate motor insurance premiums put ownership of a car beyond the reach of many newly qualified drivers, with a licence burning a hole in the back pocket of their skinny jeans. And if they did save up enough pennies to insure a potential first car, then said car was (far) less Footballer’s Wives and (a lot) more Wayne’s World in appearance and social status. Nowadays though, telematics insurance policies are all the rage with young people, essentially slashing the premium prices in many cases.

‘The future is now’ might sound like some corny quote straight outta ‘Back to the Future’, yet with regards to the explosion of telematics car insurance policies, the evidence is here for all to see; as the motor insurance industry continues to promote a revolutionary product which effectively stands as both a definable and measurable way in which to calculate risk.

In fact, such is the prevalence of black box insurance nowadays that not long into all our futures (roughly 2024 according to one leading UK motor insurance provider’s rough estimates), telematics will be an opt-out rather than opt-in clause.

What exactly is black box insurance?

It’s what’s colloquially knowns as a ‘pay-as-you-drive’ or alternatively, ‘pay-how-you-drive’ insurance policy which determines how much premium the policyholder will have to stump up for based on how safe a driver they are.

Whilst historically car insurance companies have worked out how much we all pay for the privilege of getting behind the wheel of our vehicles based on a number of tried and tested variables and factors including the would-be insured party’s age, driving experience and history, where they live, where the car is parked, what it’s primarily used for, how powerful/efficient the engine is.

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On top of that, the car’s current market value as well as the security provisions you have in place (to prevent it from being stolen/vandalised) are also taken into account.

Now the emphasis is placed upon how you drive, when and where you drive and how you cope with driving conditions presented during your average journeys.

All this doesn’t mean the previous criteria are overlooked, as they still remain vitally important as to the calculation process employed by motor insurers.

It’s simply that alongside what many critics of the old practice refer to as ‘general assumptions’ as to the acknowledged and habitually accepted driving habits of certain demographics, car insurers offering telematics policies will also prioritise and focus intently on the electronically-gathered data to calculate and recalibrate individual quotes courtesy of specific driving skills and habits showcased over a set period of time.

How does black box insurance work in reality?

In a physical sense your car insurer will either provide you with an on-board black box device or suggest that you adopt a dedicated smartphone app. The black box is roughly the same proportions as a typical smartphone, which will be fitted somewhere in the car (like beneath the dashboard for example). It will then monitor, record and transmit data about your driving habits back to you motor insurance policy provider, who will then study the information and compile a driver profile which in turn will, potentially, paint an accurate picture of the sort of driver you are.

Whether or not you’re diligent, alert, aware, equipped with the fundamental and pre-requisitional coping mechanisms and generally accepted skillset that your ever-changing surroundings presented when behind the wheel routinely demand of you.

Learn more with our guide: how does black box car insurance work?

What data is captured, logged and subsequently made accessible to the insurers?

Although different insurers may concentrate on slightly different criteria when analysing the black box data collected, there are some standard aspects they all look out for.

These typically include:

  • The type of roads the driver/policyholder frequents
  • The location
  • The average speed
  • Acceleration and deceleration logistics and how much force is applied to braking
  • Cornering

A lot will depend on the frequency by which the information is recorded too, with some devices configured to record driving data at 30 second intervals, whilst other systems as much as 1 second intervals.

Varying snapshots provide a wealth of insights as far as the motor insurer is concerned, all of which is then taken into account as they build a driver/policyholder profile. In the case of reviewing accident footage, the quicker and more persistent the shutter speeds the more incisive the evidence gathered should claims be forthcoming and/or contested legally thereafter from all parties involved. Again, this is where telematics comes into its own to a large extent, proving invaluable as a witness tool.

The bottom line is the safer the policyholder’s driving exhibited, the better the car insurance deal they’ll receive in the medium to long-term, whereas those drivers who display more erratic or perceived dangerous habits and characteristics on the road will represent a higher insurance risk in the (now all-seeing) eyes of the insurance provider and be hit with higher premiums.

It’s all about incentivising the driver at the end of the day, and the metaphorical carrot on this occasion is the prize of lower motor insurance premiums. The by-product of this is naturally safer drivers, which of course equals safer roads and fewer accidents and fatalities, at least in theory.

What’s more, it means less insurance claims which subsequently will result in lower policy premiums across the board for motorists in the long run; all of which is something well worth collectively striving for.

What’s the time-scale of benefitting from telematics insurance, in terms of lower premiums?

Although not always, there’s opportunity to reap the financial rewards for being a conscientious and safe driver early doors on occasion, and rather than waiting on renewal times to home into view a premium price may well be reassessed on a more regular basis, even as regular as the passing of every few weeks or months.

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Again it all rather depends on the particular policy agreement you have underwritten by the insurance provider at the outset of an individual policy.

What other pros are there, aside from potentially reduced insurance premiums?

Well, the black box device is normally installed free of charge (or in some cases for a small fee), and it can also track your vehicle if it happens to fall prey to car thieves.

Also some insurers might afford the new telematics policyholder a bundle of miles as a ‘driving allowance’ to start them off (however might penalise the driver if they exceed the limit) and in the event of being involved in an accident the device will alert the insurer. If the vehicle is then deemed stationary then many insurance providers would seek to contact the policyholder by their smartphone and establish what personal harm or damage has occurred, while if the severity of the unfolding situation dictates it, then the insurer is ideally placed to communicate with the emergency services and furnish them with the necessary information with immediate effect.

Meanwhile an online portal offered by many telematics insurers will allow the policyholder to view their logged driving details, a virtual provision which also extends to an instruction area which gives tips and pointers on how to improve your on-road behaviour and ultimately reduce your premium.

Any cons we should be made aware of?

It could be that your regular route means that you drive down relatively dangerous roads during anti-social hours (which would be difficult to avoid if your work necessitated it), however that would mean you were penalised as a result.

Statistically more road traffic accidents are said to happen during after-dark hours as well as during rush hour periods, again the latter being unavoidable if your employment obligations took place during conventional hours and days.

It’s not unheard of for some telematics insurers to consequently invalidate policies if the insured party took to the roads at what’s deemed hours of day more prone to witnessing accidents, sadly through no fault of your own. So it’s therefore imperative to thrash various parts of your specific package out in the beginning to side-step any nasty (or financially disadvantageous) surprises popping up further down the road.

Another area which might prove problematic for a young or inexperienced driver is when and where to apply personal judgement calls in direct relation to driving behaviours and patterns. For instance by ascertaining the road conditions confronted with in certain scenarios which could easily play out unexpectedly and therein trying to second guess what the telematics device is looking for (and therein the insurer will be scrutinising most) in ambiguous situations.

To put this in some form of real world context, imagine if you’re forced to brake sharply through no fault of your own, if say they vehicle in front slams theirs on without any prior warning. Although on paper (or rather, black box) this might, hypothetically amount to a dangerous move, the only viable alternative option in this unprecedented series of circumstances would be to plough into the vehicle in front. So always err on the side of caution and to a large degree, common sense, which is always advisable when driving come what may.