A Guide to Saving Car Insurance Premiums with Black Box Insurance or Telematics Insurance
Are you a car owner paying hundreds of dollars on insurance premium? Do you want to lower the cost of insurance? If you are a good driver then there is a way for you to lower your insurance rates by buying black box insurance. A relatively new concept in many parts of the world, black box insurance, also known as telematics, is an innovative usage-based insurance.
When you sign up for it, your insurance company fits a telematics device in your car that measures how well you drive. If you can prove that you drive safely, you prove that you are a good customer for the insurance company. This can earn you significant discounts on your premiums.
Today there are only select insurance companies that offer telematics technology across the world. The US pay-as-you-drive insurance company Progressive reports 1.2 million policies in 2013. And global subscriptions stand at 5.5 million at the end of 2013 and are growing.
For car owners who want more information about this innovative technology, this is a guide to getting a black box fitted in your car for telematics insurance.
Telemetry: how it works
The insurer installs the telemetry device under the hood, the windshield of your car or anywhere else on the chassis. This device contains a GPS (Global Positioning system) that sends data from your car to the insurer via satellite. Your driving is then monitored by the insurance company every time you take your car out.
Your insurer will calculate your premium based on the data from the black box, based on how risky a driver they think you are. As a policy holder, you will be given a 'driver score’ which will be shared with you usually on a web portal along with your driving history.
How is the black box installed? What is the cost of installation?
The black box is a pocket-sized device, usually the size of a smartphone or a deck of cards. Installation will typically take about an hour. The device may be installed anywhere in your car, but it is usually hidden. Do not try to tamper with it because it will defeat the purpose. Also, it can work as a tracker should your car be stolen, so you don’t want the thief to be able to remove it.
There is usually no cost of installation. Only a few black box providers will charge you for the installation. Also, if you decide you want to change providers, you can simply have the first one removed and another one installed at no cost. However, most companies will charge you for having the GPS device removed altogether.
What do I need to do for the installation?
There are a few documents you will need to prepare for the installer before the GPS device can be fitted and your cover is activated. You will need to show:
- · Your license or the test certificate to show you have passed your driving test and are waiting for your license,
- · Documents which will show you are the owner of the car or any other documents related to ownership history
- · If you had insurance before, the proof of your no claims discounts.
What does the insurance company monitor?
The GPS system allows your insurers to track your movements. This will help them to gauge the following:
- · The time of day that you usually drive. If you don’t drive during rush hour or late at night, you score higher.
- · The average speeds you drive on different kinds of roads
- · How measured or rapid your acceleration is
- · Your cornering and braking behavior
- · The number of miles you drive
Other things are also taken into consideration to calculate your score. These include your age, job, areas in which you drive and how long you have been driving. Some insurance companies may mention the safer hours of day when you may drive to maintain your score. Your car still remains insured if you drive at other times, but it can affect your score.
What is the Potential for Insurance Savings with Black Boxes?
Savings made with black box insurance can be significant. Depending on your driver score and the personalized insurance premium drawn up for you, it is possible to get discounts of up to 40% on your premiums.
UK insurance company Directline, for instance, offers 20% savings to young drivers. A young driver from Manchester managed to get his premium down from a quoted £11,000 to £500. Another report reveals how even high-risk drivers can save as much as £200 on insurance with a black box.
What are the other benefits of telematics?
Telematics is automatically a good option for good drivers. But inexperienced drivers and young drivers who fall in the high-risk group for insurance companies can also benefit from black box insurance. Such high risk groups usually pay higher premiums, but having a black box fitted in can help them monitor their driving, learn to drive safe and pay cheaper insurance rates as well.
Another benefit is that you don’t buy a separate anti-theft device for your car – the black box will do your tracking for you.
Also, you can obtain personalized driving records from the feedback sent back to you by your insurer. This will help you to monitor your performance and learn the trends that raise your driving score.
Can the Black Box Be Misused?
Technically, it is possible. This is a fear that many critics of black box insurance have. They believe that the information can come back to incriminate the driver later. However, you should know that most new cars are already fitted with hidden black boxes that contain far more meaningful personal information that can be used against you than the black boxes your insurance company will install. Black boxes are therefore not a new concept.
When your insurance company fixes the black box in your car, they will usually promise complete confidentiality. You will be told that your information will not be shared with any third party. Unless the police request the information in some circumstances, you should not fear a misuse of the black box.