I’m no boy racer, but will a black box help me cut my premiums?
ARE the little black boxes that monitor driving useful only for teenagers and twentysomething motorists who want to cut the crippling cost of car insurance? Or could they also save money for people like me, whose teenage years are far behind them?
The government has made clear its support for “telematics” tracking devices, which it believes can improve road safety.
I was intrigued to give it a go, particularly as I have written about the fledgling technology for more than a decade. So, for two months, my driving has been monitored by one of the small devices, fitted to my ageing but reliable Ford Focus.
The idea is that safer driving means cheaper insurance. Sadly, however, I learnt that it would not save me a penny. Quite the opposite, in fact. If I switched to the insurer that provided my box, my annual premium would more than double.
Telematics did improve my driving, though, particularly my tendency go quicker than I should on motorways.
I was judged on when I drive (as travelling during peak hours and at night is more risky); my speed (that one’s obvious); how smoothly I drive, how often I take breaks (as driving while tired raises the risk of accidents); and how much I travel on motorways (which tend to be safer than other roads).
Telematics insurance has boomed, with the number of policyholders rising from 12,000 in 2009 to 323,000 last year, according to the British Insurance Brokers’ Association.
The boxes, typically no larger than a paperback book, use the same technology found in mobile phones, such as a GPS tracker to log location. They are particularly useful for young motorists, who often face high premiums because insurers tend to assume all 18-year-old male drivers are boy racers.
An 18-year-old with a telematics policy would save about £740 a year on insurance, according to gocompare.com, provided they demonstrate good driving. It is a generous discount, but remember that drivers of this age typically pay more than £2,500 a year for cover.
My telematics experience
I asked insurethebox.com, which has offered telematics policies since 2010, to install a device in my car. It took an engineer about 10 minutes to attach it to the battery.
Insurethebox calculates premiums based on a maximum annual mileage, usually 6,000, 8,000 or 10,000 miles. The lower the mileage, the lower the premium. But it is possible to earn up to 100 “bonus miles” each month by demonstrating good driving.
Drivers who fail to earn bonus miles and reach their limit before the year is finished must pay more for “top-up” miles. Good behaviour allows them to spend more time on the road at no extra cost.
So, would it save me money?
Unfortunately not. My annual non-telematics policy with the insurer Privilege costs about £600, with the benefit of 10 years no-claims discount.
For the purposes of this article, I asked Insurethebox to provide a representative quote based on my details. I was quoted a staggering £1,278 for cover for 6,000 miles a year. It would be £300 more — £1,578 — if I wanted to drive 10,000 miles in a year.
There was no way I could make its deals trump the one from my current insurer, even if my driving were perfect.
However, it could be very different if I were 18 (half my age — I admit it). There would be no no-claims discount, but if all other details were the same — such as type of car and address — Insurethebox would charge £3,413 for 6,000 miles.
While that sounds high, it was the best deal based on a comparison using Gocompare, which offered policies costing up to £4,300.
What about my driving?
The number of bonus miles earned is shown each month on your online account. My tally was zero in November, my first month. While I did well in most categories, I was penalised for driving over the 70mph limit on motorways.
It was galling to learn that about 40% of Insurethebox drivers earn the maximum 100 bonus miles each month, which means they must stick diligently to the rules of the road. Last month I took more care and was rewarded with 32 bonus miles.
What about other telematics insurers?
There are twenty-six telematics policies available, from insurers including Admiral, Tesco, Coverbox and Marmalade. Most focus on young drivers, but senior motorists are not excluded: Insurethebox said its oldest customer is 82, for example.
The cost of the box is usually included in the premium. If you cancel the policy in the first year, there may be a charge. This ranges from £45 to £210, with an average of £100, according to Gocompare.
Insurethebox does not charge separately to have the device fitted or removed. Customers usually just ask for it to be switched off if they move to a different policy.
Can insurers share data about my driving?
Not unless you give permission. Insurethebox said customers own the data. If you break the law by speeding, the authorities will not be notified — so a penalty notice will not automatically arrive in the post. You will just miss out on bonus miles.
Only in extreme circumstances will Insurethebox divulge data without permission — for example, if it receives a court order from police investigating a serious crime.
Customers who want to share their good driving record with another insurer can request the data, but there is no guarantee it will be taken into account.
Ben Howarth, policy adviser for motor insurance at the Association of British Insurers (ABI), said: “Insurers recognise the importance of data privacy and take their legal responsibilities for data protection seriously. The ABI has produced a good-practice guide to give guidance on telematics, which includes principles to help customers understand how, with their consent, data will be collected and what it will be used for.”
Will telematics always focus on young drivers?
Not necessarily. The government wants more cars to have tracker devices installed. In a report published last month, the Department for Transport said: “We will support innovation in the motoring insurance market so premiums become more responsive to safer driver behaviour and vehicle choice. This could include extending the reward-based insurance approach pioneered through young driver telematics products to the wider motoring community and fleets.”
Last year, the European parliament voted to have all new cars fitted with a “eCall” device from April 2018. This so-called SOS black box will automatically contact the emergency services if a vehicle is involved in an accident.
Telematics boxes can help combat crime as they can be used to track stolen vehicles, and may have reduced road fatalities by getting help to the scene of accidents more quickly. Insurethebox has issued 80,000 “accident alerts” since its launch five years ago. The device automatically contacts the insurer if it detects an emergency stop or the vehicle leaves the road. The insurer will then inform emergency services if necessary.
How different policies work
Insurers have different ways of rewarding good driving. Here are some of the deals on offer if your driving is monitored.
Insurethebox offers deals based on driving a certain number of miles a year. The lower the mileage, the cheaper the deal. It is possible to earn “bonus” miles through being a good driver, or to buy more miles if you use up your annual allowance.
With Carrot Insurance, you can earn up to 15% of your annual premium in cash rewards. After three months of good driving, you receive a Carrot Card. This is a Mastercard pre-loaded with any cash earned, for you to spend as you wish.
Mobile phone apps
Some insurers do not insist on a black box being installed. For example, customers of Drivology, part of Axa, download a mobile phone app to monitor their driving. Good drivers pay less and poor drivers pay more.
A number of insurers make their apps available to drivers who are not customers. MoreThan and Aviva have free apps called Drive.