Black Box Car Insurance: Pros and Cons

If you’re looking for a way to reduce the cost of your car insurance, you might want to consider black box car insurance as an option.

But, a black box policy isn’t necessarily the best solution for everyone. 

So, if you’re wondering what it is, how it works, what are the black box car insurance pros and cons, and whether it is the right choice for you, read on.

What is Black Box Insurance?

Telematics car insurance, commonly known as black box insurance, is a relatively new type of insurance where the insurance provider determines your premiums based on your driving performance, in addition to your age, type of car you drive, and other relevant information that insurers take into consideration.

How Does Black Box Car Insurance Work?

When you take out black box insurance, the insurance company will install a small black box device in your car. 

This GPS box monitors the driver’s behaviour and transmits information to the insurer regarding the driver’s performance, including:

• Speed
• Braking
• Steering
• Location
• Driving frequency
• Distance travelled
• Time of day when the car is in use
• Corners

Based on these metrics, the insurance company will determine whether you’re a safe driver or not and set lower premiums for those who have a good track record. 

Pros and Cons of Black Box Car Insurance

For now, drivers who take out black box car insurance make up only a small portion of the total market for car insurance, but this type of insurance is slowly growing in popularity, especially among younger drivers. 

But, before you make a final decision, it’s best to consider all the black box insurance pros and cons and figure out if it is the right type of insurance for you.

Benefits of black box insurance

• Lower premiums: If you drive safely, you will pay lower premiums.

• Regular feedback: You’ll receive feedback on your driving, as well as suggestions on how to improve it.

• Finding a stolen vehicle: If your car gets stolen, your insurance provider can use the GPS tracking system to locate it.

• Help in accidents: If you get involved in an accident, your insurer could help you by alerting the emergency services. 

• Provide proof: The telematics devices, which track your speed, can be used as proof that you were driving under the speed limit in case of an accident.

• Special offers and rewards: Some insurance providers offer gifts and vouchers for drivers that drive well.

Disadvantages of black box car insurance

• Bad driving is more expensive: If you corner fast or brake hard your insurer will know if and increase your premiums if you ignore their feedback.

• Driving at night is discouraged: Some insurance providers consider driving at night ‘bad driving’. That means if you drive at night, you might get penalised.

• Limits mileage: Your insurer might limit your annual mileage. If you drive beyond that limit your premium may go up.

• Having a second driver can cost more: Your premiums may increase if the second driver fails to follow the rules. 

How Much Does Black Box Insurance Cost?

The cost of the black box insurance depends on the driver’s circumstances. In addition to the metrics the device measures, your insurance company will also consider your claim history, your driving record, your location, and the crime rate in the area.

For those who are considered to be a high risk to insure, like young drivers under the age of 25, black box insurance will always be cheaper than standard car insurance.

Will car insurance go down at 25?

Another thing to keep in mind is that black box policies often come with some extra fees, which may affect the cost of your premium, such as:

• Change of vehicle

If you buy a new car and want to fit your black box into your new vehicle, your insurance provider will ask you to pay for the service.

• Missed installation date

Your insurer will charge you a fee if you miss the installation date for your vehicle, regardless of the reason

• Removing the black box

If you don’t want to renew your black box policy, your insurer won’t remove the device– they will disconnect it instead. If you want it removed, you will have to pay for it. 

• Traditional car insurance fees

Most black box insurance providers will charge you many of the same fees that come with standard car insurance, such as early cancellation charges, interest (if you pay monthly), and fees for duplicate documents. 

Is Black Box Insurance Worth It?

Although telematics insurance tends to be most popular among new and young drivers who usually pay the highest insurance rates, it can also be a great option for more experienced drivers who are seen as high risk by insurance companies.

You’re more likely to save on insurance costs with a black box policy if you’re:

• A first-time driver 

Young drivers pay the highest premium because they are inexperienced. If you passed your driving test later in life, you’ll also be more likely to pay high premiums with standard insurance.

• A safe driver

If you’re safer than the average driver you can benefit from discounts on your premium and rewards for maintaining a good driving record.

• Low mileage driver

If you set a mileage limit with your insurance company when taking out a policy, the insurer will offer cheaper premiums. 

• Daytime driver

If you rarely drive between 11 pm and 6 am, which is statistically a riskier time to drive, you could save some money by opting for a curfew policy.

•  Driver with convictions

If you have a driving conviction on your records, a standard insurance policy will almost certainly cost you more than black box insurance. 

Bottom Line 

A black box insurance policy can save you money on premiums if you’re a safe driver. It’s an excellent choice for drivers that are riskier to insure in the eyes of insurance companies, such as young drivers, inexperienced drivers, and drivers with motoring convictions.