Careful How You Drive, Your Insurer Is Watching: The Rise Of Telematics Insurance

Car speedometerIf you aren’t keen on being tracked wherever you go, then switch off your mobile phone — anywhere you have a signal, you can be located with surprising accuracy.

That same technology — with added extras — is becoming increasingly popular with car insurance companies, who are prepared to give cheaper premiums to drivers who are willing to have a ‘black box’ — known as a telematics unit — fitted to their car.

What is telematics insurance

Telematics car insurance means that your car’s black box records your driving behaviour everytime the car is used, capturing data such as:

  • Time of day
  • Hard acceleration
  • Speed
  • Sudden braking or violent steering
  • Location and road type — e.g. motorway or rural

The idea is that some types of driving are riskier than others. For example, a great many accidents happen between 11pm and 5am, especially those involving young drivers aged 17-24. With a telematics policy, you might agree not to use your car between those hours, in return for a cheaper premium.

If you do use your car during the night-time period, then your insurer may send you an extra bill at the end of the month, requiring you to pay extra to cover your night-time usage, which wasn’t covered by your standard policy.

PAYG insurance?

Telematics can also be used to provide pay-as-you-go insurance, and some companies are setting limits on mileage, road types, rush hour usage and other statistical risk factors. Exceed these limits, and you have to pay more.

The recent EU ban on gender-based insurance pricing — which means that women drivers can no longer be given lower premiums just because they are female — is another point in favour of telematics insurance. If they genuinely are safer drivers, then their telematics ‘scores’ should justify this, enabling them to enjoy cheaper car insurance than men.

The shape of things to come?

Telematics insurance is becoming increasingly popular, and while I’m not that keen, I can definitely see the logic in it, especially as the cost of car insurance is now so high for many drivers. In addition, perhaps we need more oversight to improve our driving behaviour — roads are busier and more crowded than ever, and cars are faster and easier to drive than ever. It’s not a healthy combination and there is a lot of bad and dangerous driving that goes unseen and unpenalised.

Think about it this way: would your driving change if you had a police officer sat in the passenger seat next to you at all times? If the answer is yes, then perhaps you need to look at the way you drive.

As far as I know, telematics insurance isn’t used to enforce speeding convictions, but the evidence from the black box can be used in insurance claims and it seems highly likely that it may end up being used as supporting evidence in court cases, too.

Most of the leading car insurance price comparison sites now offer online comparison of telematics insurance, enabling you to compare prices between different telematics policies and against standard policies:

If you would like to go direct, then here are some of the insurance companies that already offer telematics insurance policies:

Not just for young drivers

Finally, it’s worth noting that although black box insurance is primarily aimed at young drivers at the moment, the idea can be applied to most drivers successfully and is likely to become more widely available over the next few years.

Although older drivers may not like the idea of having a ‘spy in the car’, there is no doubt that this represents the most effective way to assess risky behaviour and make drivers pay accordingly.

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