How black box car insurance works

What is black box 'telematics' insurance?

Black box insurance, also known as telematics, is a type of car insurance policy that calculates your premium based on the way that you drive.

Our short video explains what it is and how it could save you money:

How does black box 'telematics' insurance work?

Black box insurance makes use of technology to track how you're driving, or how much you drive. It means the insurer can give you a more accurate price.

Depending on the policy, this technology can take the form of bulky GPS devices that require professional installation, matchbox-sized trackers that plug into your car's dashboard, or 'tags' that you can simply stick on your windscreen. 

Some don't require any 'black box' at all, instead tracking your phone or using it to remotely access your car's mileometer.

Each insurer will have slightly different metrics for deciding how safe a driver you are, but most will take into account the following:

• braking
• cornering
• steering
• speed
• the time you drive
• mileage.

Whether you're young or not so young, black box policies aren't the only way to start chipping away at your insurance premiums. For more, see our full guide on how to find cheap car insurance.

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How do black box 'telematics' insurers reward good driving?

Black box insurers can reward you in a number of ways including:

• discounting your premium if you have a good track record of safe driving
• bonuses, such as retail vouchers
• money back off your premium.

Policies that are based on mileage – where there's a limit on how much you can drive – often have bonus miles as rewards that are dished out monthly or quarterly.

Telematics technology brings additional perks. Black box policies let you review your driving over time, helping to identify where you could improve. In some cases, black box technology can also be used to help trace your car if it's stolen, or provide evidence to support you in a claims dispute.

However, there are also penalties if you drive badly. Some providers could increase your premiums, while others may cancel your cover altogether if you perform poorly or are frequently caught breaking the speed limit.

Black box car insurance for younger drivers

When telematics policies first emerged, they were aimed squarely at young or inexperienced drivers. Typically, young drivers – particularly those under 25 – pay much more for car insurance than other groups.

The reason for this is young drivers, on average, claim most frequently and make the costliest claims.

But if you're a young driver who drives more safely than the average young driver, then black box policies should, on paper, recognise this, and provide you with a fairer price.

• Find out more: Best and worst car insurance companies

Black box car insurance for drivers with low mileage

Telematics policies have since expanded their appeal to drivers of all ages.

Insurers such as By Miles and the RAC, for example, have launched policies aimed at customers who drive fewer miles than average (5,300 miles a year in 2021, according to the Department for Transport).

These drivers can find themselves getting charged more for insurance.

Providers may charge per mile, plus an annual or monthly fee to cover your car while it's parked.

If you need to use a car for only a short time, rather than occasionally throughout the year, consider taking our a short-term car insurance policy; some providers charge per hour.

Who offers black box insurance?

The table shows a selection of black box insurers, the technology they use and the benefits they offer.

How much does black box 'telematics' insurance cost?

Like traditional car insurers, black box insurance companies charge a number of fees. The following factors could affect how much your black box car insurance policy could cost.

Change of vehicle

If you buy a new car and want to continue using your black box, some providers will charge you a fee for the privilege.

Missed installation

When you sign up for a black box policy that needs an engineer to install it, an installation date will be arranged. If you miss the date, it's likely you'll incur a fee.

Box disconnection or removal

If you no longer want a black box policy and don't renew (or you cancel your policy mid-term), most providers will not ask you to have the box removed, instead preferring to disconnect it remotely. However, if you do decide that you want to get rid of the box, you could be charged.

Traditional car insurance fees

As well as the fees listed above, black box insurers charge many of the same fees as traditional car insurers. This includes an interest if you pay monthly, mid-term amendment fees and early cancellation charges.

If you opt for black box car insurance, make sure you read the terms and conditions carefully before you sign up. This will help you avoid any nasty surprises if your circumstances change mid-policy.

• Find out more: the insurers with the highest and lowest fees

Is black box 'telematics' insurance cheaper?

Black box car insurance is not always cheaper than traditional car insurance.

It's best to check both when shopping around, especially if you are struggling to find affordable car insurance.

Make sure you carefully check and understand your policy document, in particular how your policy might reward you for good driving and penalise you for bad habits.

Pros and cons of black box car insurance

On paper, black box insurance seems like a much fairer system of calculating car insurance, but it's not without drawbacks.

Most obviously, some drivers may object to being constantly tracked by their insurer.

Here are some of the pros and cons of black box insurance to consider:

Pros

• Good driving can lower your premium.
• Stolen cars can be located.
• Encourages safe driving.
• Suitable for younger, older and infrequent drivers.

Cons

• Bad driving will result in higher premiums.
• Can incur extra charges.
• May not suit frequent drivers.
• Could restrict your driving habits.

Black box insurance: your questions answered

Is black box insurance only for younger drivers?

When it was first launched in the UK, black box car insurance was mainly aimed at young drivers, as they pay much more than the average motorist for cover.

Black box car insurance has since opened up to a wider range of people; however, some policies still only cover younger drivers.

What happens to my data with black box insurance?

For black box insurance to work, your insurer constantly tracks your behaviour behind the wheel to see how you drive.

This has led to some concerns about the security of your data; however, data protection laws mean that your driving data is protected.

Your data may be shared with third parties who work with the insurer, such as claims professionals, and your data may be handed over to the police if they have a court order asking for it (or if you give the police permission or are suspected of fraud).

Will I be on a curfew?

It used to be relatively common for black box benefits to be conditional on customers not driving at certain times during the night. Hard curfews are less likely to feature in policies now (none of the policies in our table above have one).

However, in combination with other factors – such as speeding, braking, and cornering – some policies will still consider the times you tend to drive when reviewing how safe a driver you are.

How can I monitor my own driving?

Black box car insurers send you frequent feedback so you can monitor your driving performance. They will pick out trends that affect how your premium is calculated. 

This feedback is accessible online. Some providers offer smartphone apps that will also give you access to your driving data.

Other ways to get cheap car insurance for young drivers

If you're a young or inexperienced driver, you're probably facing sky-high premiums. Black box policies may help you reduce these, but there are also other ways to reduce your insurance costs.

Stick with a cheap-to-insure car

Insurance is a significant cost in running a car and, in turn, the type and model of car has a significant bearing on the premium. 

For example, for younger or inexperienced drivers, cars with lower-horsepower engines are likely to be much cheaper to insure than high-performance models. So before you purchase a car, it's sensible to run an insurance quote for it to help form your decision.

• Read Which?'s car reviews to find the right new or used car for first-time drivers.

Find ways to reduce risk

Let's face it: insurers think that because you're young, you're going to have prangs left, right and centre. So take steps to show them that you aren't as risky as they think. This could include:

• avoiding modifications to your car
• consider a car with a smaller engine
• cutting down mileage.

Add a named driver to your policy

Add an older and more experienced named driver to your policy and the cost of cover is likely to fall. Bear in mind, however, that it's illegal to put someone down as the main driver if this is not the case.

This practice is known as 'fronting'. It's a form of fraud, and if your insurer finds out they may refuse to pay out on a claim and also cancel your policy. The insurer may also take legal action against you for fraud.

Add a voluntary excess

The excess should reflect the amount you can afford to pay without the insurer's support. The higher this is, the lower your premium will be. Remember, though, that policies almost always come with compulsory excesses beneath the voluntary one you can choose. So check that you're comfortable with what the total of these is.

• Find out more: How to find cheap car insurance 

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