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Is Black Box Insurance Cheaper Than Your Standard Insurance?

Black Box Insurance Can Save You Money - But Is It Worth having Every Aspect Of Your Driving Monitored To Save A few Extra Quid?

Sep 29, 2014

Is Black Box Insurance Cheaper Than Your Standard Insurance?

According to research by the AA, the average car insurance premium in the UK is now £504. However, the cost of insurance can be double that if you are a young driver or you have previous claims or convictions.

To help to reduce the cost of car insurance, more and more drivers are turning to ‘black box’ insurance. But what is ‘black box’ insurance? How does it work? And would it benefit you? Keep reading for the answers to these questions and more.

What is ‘black box’ insurance?

Traditional car insurance policies base your premium on factors such as your age, occupation, address and driving history. However, a ‘black box’ or ‘telematics’ insurance policy works by monitoring your actual driving.

With a black box policy your car will be fitted with a small device that records your speed, the distance you drive and the type of roads you drive on. It can also monitor your acceleration, braking and cornering to determine how careful a driver you are.

The insurer uses the data from the black box to tailor the cost of insurance to your driving. For example, if you drive at high speeds or at peak times then your insurance is likely to be more expensive.

The aim of the ‘black box’ is to base the cost of your insurance directly on your driving ability rather than more general statistics about similar drivers. If you are a young driver but drive short distances carefully in off-peak hours then you could see a reduction in the cost of your cover.

Sharp increase in ‘black box’ insurance sales since 2012

2014 research from the British Insurance Brokers' Association (BIBA) revealed that there has been a sharp increase in the number of drivers buying black box insurance. Sales of these policies increased by 116,000 between June 2012 and spring 2014, equivalent to a 61 per cent rise.

Graeme Trudgill, BIBA's Executive Director, said: "The rise of the new App smart phone technology will see sales of behaviour based products continue to increase. BIBA's new research demonstrates how young drivers are embracing technology and more and more brokers are launching products to meet the demand.”

Next, we look at three groups of drivers that often benefit from lower car insurance premiums by using a black box policy.

3 groups of drivers that would benefit from black box insurance

1. Careful drivers

If you drive carefully – and that includes not braking or accelerating sharply or cornering fast – then you could save money with black box insurance.

Some insurers analyse your driving and apply discounts to your policy every three months while others will apply discounts for good driving. The Daily Telegraph recently reported that a leading telematics insurer claims that 70 per cent of its customers have received a good driving discount.

2. Young drivers

Car insurance premiums tend to be highest for drivers aged between 17 and 24 because they are statistically the most likely to be involved in a car accident. According to the Association of British Insurers (ABI) drivers in this age group are three times more likely than drivers of other ages to be responsible for "catastrophic claims".

If you’re a young driver but you can prove that you are responsible – that you drive carefully and within speed limits – then your premiums are likely to be lower than if you opted for traditional cover.

If you have only just passed your test – irrespective of your age – then this type of cover could also help you if you demonstrate that you are responsible and careful behind the wheel.

3. Low mileage drivers

If you don’t drive far then you can save money by using a black box policy. Rather than paying the same for your cover a motorist who drives thousands of miles every year, you can choose the number of miles that you will be covered for and your premium will be worked out on these limited miles.

Some insurers will also let you ‘top up’ your miles for an additional premium if you are likely to exceed your policy limit.

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