Black box insurance (also known as telematics insurance) is a new trend of cover that is set to grow hugely over the next five years and is already in the mainstream amongst younger drivers. The idea behind black box insurance is that safer and better drivers are rewarded by lower insurance premiums. This is done by tracking each person's driving habits using a black box tracking device.
This tracking device will measure your overall driving habits and give you a safety score. Things like sharp breaking, the speed you drive at, how far you travel and even the danger of roads you travel on are measured. People who exhibit safer driving patterns will benefit from much lower premiums after the “testing” period is finished.
Black box insurance makes use of telematics technology to deliver information from the box in your car to its data centres. Telematics is a fast growing technology which effectively means the remote transfer of information from one electronic platform to another. This telematics technology can record your breaking speed and reaction times, acceleration tendencies and patterns, your cornering, the type of roads you drive on and your location. It is effectively the big brother of cars but if you drive well, this should not be a bad thing as you will be rewarded with lower premiums than your counterparts.
Who is this best suited to?
Black box insurance is best suited to safer drivers and younger drivers. People who keep to the speed limits, do not break to hard or corner too fast and who are generally good drivers will benefit from it. Right now, the majority of accidents occur in the 17-25 year old age bracket. This pattern means that the premiums for this age group are markedly higher. Telematics and black box insurance has the opportunity to make young driver car insurance fair, where good drivers pay less and reckless ones pay more.