How a black box can cut the cost of your car insurance
Black box technology is nothing new but as car insurance premiums soar, it's becoming a very popular option for drivers wanting to save money. Here's my low down on the key players.
Black box technology, which tracks a driver's behaviour and can lower car insurance premiums, has been around since 2008 but in the past year there has been a fivefold increase in sales as eager drivers snap up the chance to lower their car costs.
On average drivers can save around 25% a year off the price they normally pay for car insurance, according to the British Insurance Brokers’ Association (BIBA), which makes it a tempting option when you take into account the rising price of car insurance.
What is black box insurance?
Black box insurance is known by several different names, including Telematics, Smartbox, GPS-based, Pay As You Drive and Usage Based, but they all mean the same thing. An insurer places a black box in your vehicle which monitors how you drive and rewards you with a cheaper policy if you can prove you’re driving safely.
The box tracks things like how a driver is cornering, breaking and sticking to the speed limits and the data is sent via GPS to your insurance company. It can then see detailed information about you and your driving habits, such as the time of day you’re driving, the type of road you travel on, the distance the car has travelled and how safely, or how poorly, you’re driving.
How much can you save?
This depends on the individual insurer and your own circumstances, but your policy costs will be lower if you stick to things like avoiding driving in rush hour traffic or late at night and generally maintaining a safe level of driving.
Young drivers, especially male drivers, are most likely to have an accident and two out of every five take place during 11pm and 6am, according to BIBA. By encouraging drivers to be off the road during these hours, the risk of an accident is lowered and in turn so are the insurance costs.
Who does it benefit?
Some policies, such as the Co-Operative Young Driver Insurance, are only available for younger drivers. But there are also options available for older drivers wanting to save money, such as those who don't drive very often and those who avoid commuter hours.
At the end of this year the European Court judgement will come into place, banning insurance companies taking gender into account when pricing policies. This means premiums should fall for men, who typically pay more as they are deemed a higher risk, and the price for women, especially those aged under 25, will rise. Black box insurance is a way to counterbalance the rise and allows everyone a chance to lower their premiums – if they can prove they’re driving safely.
The rise in sales is due to a host of insurers jumping on the bandwagon and launching products within the black box range, but where do you start and how can you find out which one will save you the most money?
AA Drivesafe
Launched this year, the AA Drivesafe offering promises to save drivers around £850 on their annual policy.
It’s open to everyone, but is best suited to people with high insurance premiums, such as younger or newly qualified drivers. As with most policies, the price of installation of the box is included in your annual premium, and within 60 days this can be reduced depending on your driving habits.
The box works in the same way as others by tracking your driving through a GPS signal. Drivers have access to a dashboard where they can find out exactly how they’re being marked and email alerts can also be set up for important dates, such as your MoT.
Insure the Box
Launched in 2010, drivers save an average of £500 per policy with Insure the Box rising to £821 for first-time motorists. It's a 'Pay as You Drive' scheme - drivers buy a bulk of insurance miles, starting with 6,000, and a small clear box is installed for free behind the dashboard.
Policy holders can earn up to 100 bonus miles per month if they are driving according to the safety rules. If you go over the 6,000 miles, your bonus miles kick in and if you’ve used them all up you need to buy top up blocks – at a cheaper price than the original premium.
At the moment 60,000 people are signed up to Insure the Box, making it one of the biggest types of black box insurer. Although it’s primarily for young drivers, drivers of all ages can apply.
Autosaint:
Specially designed for provisional, newly-qualified and young drivers, Autosaint works by charging drivers a low premium, which is around 35% cheaper than your average policy, from the start.This is monitored each quarter and if a driver scores below 60, the premium will be changed. However, if they score 60 or above the rate will stay the same and larger discounts will be offered.
A risk profile is created by monitoring how the car is being driven, and alerts are sent out to warn you if your driving is going to push up your premium.
We looked in-depth at this particular black box in Putting telematics to the test.
The Co-operative young driver insurance
The Co-op product is specifically designed for people aged between 17 and 25 and there are currently 21,000 drivers signed up to the scheme. It was the first major insurer to get into the black box technology market last year and drivers with it have had 20% fewer car crashes than those without.
The average premium for 17 to 22-year-olds with the policy is £1,345 compared to £3,478 to those without, according to the AA British Insurance Premium Index.
Every 90 days data is reviewed from the black box and premium prices are changed accordingly. Those who prove they can stick to the rules of the road will see premiums fall while those driving consistently badly can see their premiums rise by as much as 15% of the initial price.
There are also e-mail alerts sent out every 45 days to let the driver know how they’re performing and an online dashboard where you can view your motoring safety stats, along with advice on how to lower your premium.
Coverbox insurance
A policy open to anyone, Coverbox sees you providing the insurer with details such as where your car is kept, how many miles you normally do and at what time most of your driving takes place. This is then reviewed, by looking at data from the black box, and your premium price changes depending on how strictly you’ve stuck to the original details.
iKube
Marketed as the longest continuous provider of black box insurance for young drivers in the UK, with the first policy sold back in 2006, iKube is another one specifically for drivers aged between 17 and 25. The telematics box is powered by TomTom technology and it is another 'Pay As You Drive' scheme, where your premium is reduced if you avoid driving after 11pm.
This is a good policy if you’ve not yet passed your driving test as premiums won’t change when you do and around 15,000 people are currently signed up. For older drivers, there’s also a separate policy called ‘Fair Pay Insurance’ which works in the same way. It’s most suitable for those who pay £1,000 or more for their policy and drive fewer than 8,000 miles a year and as both are powered through TomTom you get instant updates while you drive.
Ingenie
Ingenie is another one specifically for young drivers. Data is captured through the black box and sent to the insurer, and is available online or through a mobile app. There are no time curfews or mileage limiations and it simply monitors your driving over a period of time, rather than looking at isolated incideents. The price is reviewed every three months at which point a discount is applied if you’ve maintained a safe driving style.
How else can you save money on your car?
Along with getting the newest technology to help lower costs, there are lots of other things that can help lower your premium and for a full guide check out our article on 25 ways to cut your car insurance.
Are you convinced by black box insurance and is it something you or your child might try out? Whatever your thoughts we would love to hear them in the comments box below.
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Comments
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I found the black box insurance to be very helpful for my step daughter, the cheapest insurance we could find without it was £2100 but with it we got the price down to £1750 with potentially more savings if she drove very well. To further reduce her premium we increased her excess to £1000 which saved an additional £200 and then insured the excess with Excess Busters for about £40 so saved another £160. It's so hard for kids to get on the roads these days.
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If anyone was involved in a collision with a 'Black Box Driver', would the insurance company release the information of the BBD's driving behaviour prior to the collision? It must be stored somewhere to be able to be used by the insurance company to assess driving habits. Also, if a BBD disagreed with the insurance company assessment of their driving habits, can the assessment be challenged?
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This sounds like a useful way of cutting risk and thus premiums but beware! Successive governments have tried to bring in road pricing (charging per mile you drive). While the proposal is a good one (pay for what you use) we have consistently rejected this because we do not trust the government and specifically in this case to maintain their promise that it will be revenue neutral i.e. that other motoring taxes would be reduced by the same amount as is gathered by road pricing. We think that they will introduce road pricing and retrain, even if only after a few years the level of highway robbery to which we are subjected now. With this "black box" scheme we are obliged to ask if we trust insurance companies? Given that they are quite prepared to commit fraud in order to increase premiums (I can prove that statement) then the answer must be a resounding no. The only saving grace is that, unlike any possible government road pricing scheme, policy holders would be able to opt out unless, of course, we reach the stage where no insurance company offers a non-black box policy or makes it prohibitively expensive. There is also the distinct possibility that government would demand the data recorded from the boxes in order to, on the pretext of road safety, increase their revenue by automatically sending out fines for minor infringements of driving laws, mainly the easy one of speeding. Some might say that is fair enough but strict adherance to, for example, speed limits does not, in most cases, improve road safety. Proper analysis of the effects of speed cameras and their attendant policies and practices elloquently demonstrates that. The black bnox might be a useful as a route to reduce the premiums for young drivers but be very careful about any wider introduction of this part of the surveillance society.
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30 October 2014