A guide to black box insurance

Looking to renew your car insurance policy soon? Or perhaps you’re about to insure your first car? Then you may hear about, or be offered, a black box policy. 

In this guide, we’ll give you an overview of black box (or telematics) insurance, covering the pros and cons. This should help you make an informed decision as to whether this type of insurance is the right choice for you. 

What is black box insurance?

Black box insurance, also known as telematics and pay as you go car insurance, is a car insurance policy that is based on the way you drive your car. 

Once you sign up for black box insurance, your car is fitted with a black box, the size of a smartphone, which feeds information back to your insurer. It records the speed, distance and time of day or night you drive. It also looks at how you drive by monitoring your driving style, like the way you brake and take corners. 

Most insurers constantly monitor your driving, looking at the data collected from every journey on every day. Others will only monitor you for three months and then use this information to calculate how much you need to pay for your annual policy. 

How can black box insurance save me money?

If you are a young or inexperienced driver, you will usually be considered a high-risk driver by insurance companies, which means that you’ll have to pay substantially more for your car insurance policy. This is because you’re statistically more likely to have an accident[1]. 

However, if you have a black box fitted, your insurer can base your premium on how you drive, rather than how other drivers in similar circumstances drive. If you are a safe and conscientious driver, this should reduce how much you have to pay. 

Black box insurance usually works out cheaper than other policies for young and new drivers, careful drivers, drivers who only drive during the day and low mileage drivers. If you don’t fall under one or more of these types, you might find other options can be cheaper for you. 

Pros of having a black box

• It could save you money on your car insurance policy if you are a conscientious driver. Ideally, you want to limit your night time driving and how often you drive on high-risk roads. You’ll also want to avoid long journeys.
• It could help you become a better driver. You can access the information recorded by your black box by logging onto a secure website to see how you perform - and find out if you need to make any changes to the way you drive.
• It can help you locate your car if it’s stolen.
• It can alert the authorities if you’re involved in a car accident.
  
  

Cons of having a black box

• If you drive aggressively, you could end up paying more for your insurance.
• Some insurers charge for black box installation.
• How much you have to pay for your policy could change on a monthly basis. This is because many insurers can use the black box information each month to reward or penalise, depending on how you’ve driven the previous month.
• If you have a high mileage, you could end up paying more for your premium.
• If there is a curfew in place (such as no driving between 11pm and 5am) you may have to pay a penalty premium, depending on your insurer and policy. 
  
  

Other ways to save money on your car insurance

Shopping around and getting quotes from different insurers can help you get the best price. How much insurers charge per mile and for peak driving will vary. Don’t presume that black box insurance will always be the cheapest option. 

If you haven’t bought the car you’ll want to insure yet, consider getting a car with a small engine from one of the lower car insurance groups[2]. 

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