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All you need to know about the insurance black box

Black boxes’ – we’ve heard about them in airplanes for years, but increasingly the term is finding its way into the world of motoring. More and more drivers are getting a ‘black box’ installed in their car in a bid to save money on insurance. But how does it work and is it right for you? 

What is a black box?

A black box is another name for a telematics unit that is fitted to a car, which records how a car is driven. This data determines how safe a driver you are and is then sent to your insurer, which uses it to decide on your premiums.

The device records a car’s speed, the distance it travels, how it accelerates and brakes, and what time of the day or night the car is used. All this information builds a profile of the driver that the insurance company uses to work out how much of a risk they are to insure. The safer a driver you are, the less you’ll have to pay for your policy. But, on the other hand, if it seems that you drive erratically or riskily, your premiums can go up. 

What kinds of driver is it aimed at?

Black boxes were originally aimed at young drivers, as a way of curbing the astronomical amounts they were being asked to pay for premiums at the start of their driving career. 

Young drivers, as a group, tend to have the most collisions, which is why their insurance costs more. However, if a young driver can prove that they don’t take risks and they drive safely and steadily, an insurance company can base its premiums on actual data, rather than generalisations. Black boxes help them do this.

Black boxes can also help drivers who have made recent insurance claims after a collision, or those with a driving conviction, to prove that these incidents are exceptions, rather than the rule.

But telematics devices can help any driver to reduce their premiums, with the date giving them an informed say in how much their insurance should cost.

What are the benefits?

The obvious benefit is lower insurance costs for drivers. That’s why these devices have been adopted by insurance companies – and that’s not to be sniffed at given that premiums seem to increase every year.

But there are other benefits, too. For example, if more of us had black boxes in our cars, driving standards could improve. If we’re all trying to drive safer, in order to save money, the roads should be safer.  

And if you do have a crash with a black box fitted, the data can help determine whose fault it is. It can attest where you were and how fast you were driving at the time of the crash, which can help to prove you weren’t at fault, if that’s the case.

The other benefit is that, if your car gets stolen, it can be tracked because the black box records where a car is at all times. Apart from the obvious hassle that comes with having your car stolen, if it's not recovered, you can lose the no-claims bonus you’ve built up – through no fault of your own – so being able to recover your car will help you retain that discount.

What are the disadvantages of having a black box?

Just as the data from a black box can prove you’re a safe and responsible driver, it can also show that you are risky, even irresponsible. This will result in your premiums not becoming less expensive, but actually rising in price. 

In fact, black boxes are not really suitable for some drivers, because perhaps they drive a lot at night or regularly cover longer distances. These things just increase risk, so an insurance company could actually increase premiums as a result.

Is it easy to install in a car?

There are different types of black box set-ups. Some are smartphone-based, so there’s nothing to install. The smartphone has all the technology inside it to do the job.

Some companies do install an actual device in your car, though. It’s a small box – the size of a pack of cards – that a trained engineer will fit behind the dashboard of your car. It's sealed and can’t be tampered with. It also can’t be seen, so car thieves won’t know it’s there.

Boxes are usually fitted for free and, if you switch insurers and no longer have a black box policy, they will either disconnect it remotely or remove it free of charge (some companies do charge, though – and also if you want to switch boxes from one car to another).

How safe is the data?

Strict data protection laws mean that the data generated by your black box is protected. It is only shared with third parties who work with the insurer, or the police, if they have your permission or a court order asking for it.

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