What is Black Box Insurance?
Black Box Insurance Explained – Black box insurance also known as pay as you go insurance is known by many different terms including Telematics Insurance, GPS Car Insurance, Smartbox Insurance, Pay As You Drive and Usage Based Insurance (UBI).
An insurer places a black box in your car which monitors how you drive and rewards you with a cheaper policy if you can prove you’re driving safely.
The black box tracks things like how you are cornering, how you are breaking and how well you stick to the speed limits and the collected 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 you are driving.
Black box insurance involves a small black box that is fitted into your car by the insurance company. This black box is roughly the size of your average mobile phone and does not affect the car in any way. Nor does the black box inflict any damage on the car. The box uses a small amount of energy that should have no effect on the battery in your car.
What is Black Box Insurance?
Pay as you go insurance usually provides an initial period of cover for a set price; this is often limited to a certain number of miles’ cover (e.g. 6,000 miles).
Insurers review your driving periodically and could increase or decrease the cost mid-way through the policy year.
While you should always compare black box car insurance quotes based on the initial premium you need to bear in mind that this cost could change in the future and that is where you have to be vigilant in finding the best insurance company with the best overall package.
Three years ago there were only 12,000 insurance policies which used black box recorders. With insurance premiums for young people reaching from over £1000 to a ridiculous £8000 and with women no longer receiving a discount based on gender, it’s not surprising that now 180, 000 people are choosing policies with a black box tracker
When you take out black box insurance your provider will fit a black box insurance tracker in your vehicle. The black box insurance tracker uses GPS to track a number of factors that contribute to how safely you drive:
- The number of journeys that you make
- The distance that you travel
- The types of road that you use.
- The time that you travel
- Your speed at all times
- Your acceleration and braking levels
- Any accidents that you are involved in
- Where the car is located
- Direction and speed of travel before and after a collision
- Force of impact in a collision
- This allows your insurer to price your car insurance according to how you drive, rather than guessing your risk level using much broader categories.
What Data Is Collected and How Is This Data Used?
The driver data information is used in various ways depending on the policy.
In order to keep costs to a minimum, the best policy for one’s driving style needs to be carefully assessed and implemented.
Choosing the right policy for your driving style is important to minimise your costs.
Features offered include:
Charging lower mileage rates for those who avoid sharp braking and keep to speed limits
Making heavy charges for young drivers between 11pm and 6am – particularly at weekends
Charging higher mileage rates for use during rush hours
Charging higher mileage rates on particularly hazardous routes
You can increase your miles by earning Bonus Miles for safe driving. If you drive safely, you can earn up to 100 Bonus Miles each month – that’s up to 1,200 miles a year. Better drivers are offered better deals.
Top Up Miles
If you use up all your Policy Miles before the end of your policy, you can buy Top Up Miles.
Pricing includes the following generalities:
Your miles are measured by a small box, a small telematics device fitted out of sight in your car.Policy MilesPolicy miles are the number of miles on which your annual premium is based, as shown on your Schedule. You can select either 6,000 Policy Miles or 8,000 policy miles and that is how many miles you are expected to drive in a year. If you need more miles you can buy Top Up Miles.
- An initial premium cost which varies among the insurance companies
- Mileage rates increase and decrease depending on where and when trips are made
- A possible cost for the recording device to be mounted in the car
- Companies may charge for removal of the black box tracker on termination of you insurance policy. (some remove it for free and others leave it in.)
- When a car changes owners, the box may be left in place to allow a new owner to benefit from it
- Reducing or increasing the cost of your annual renewal premium, premiums may be offered depending on your risk profile based on your recorded driving behaviour throughout the year
- Some companies will use pricing to keep young drivers off the road during night-time hours
- Some companies will also offer mid-term cash back for those who have proven themselves to be low risk drivers
The driver will still have the option of paying for their premium up front or in monthly instalments but, should they be eligible for discounts, these will be reimbursed after 90 days. Similarly, the driver will have to pay extra after this 90-day period if they have been penalised for bad driving so that their insurance premium remains valid.
What is Black Box Insurance?
Advantages of Black Box Insurance
Advantages of these schemes are to both low and high risk drivers, for example:
Those who drive fewer miles and during times which are non-commuter times will be benefitted by lower cost
Young male drivers are statistically more likely to have accidents and 40% of all serious and fatal accidents occur between the hours of 11pm and 6am. By keeping young drivers off the road during these periods, insurers can reduce their risk and young drivers can benefit from lower insurance costs. To prevent use between these hours should the car be moved during this specified hours, a heavy premium is levied. Keeping young drivers off the road during periods is advantageous to insurers. They can reduce their risk and young drivers can benefit from lower insurance costs. When the policy allows it and the car is driven at night, a higher cost is applied due to the greater risk of an accident happening during those hours.
Helps to prevent theft and fast recovery of stolen vehicles, the black box insurance tracker provides the ability to easily locate a stolen car in the event of a crime however cars bearing insurance stickers proclaiming that they are covered by black box insurance trackers are less likely to be stolen.
It offers support with regard to claims management, should an accident occur because the insurance company can investigate the time, speed, braking pressure applied and conditions at the time of the accident.
Safer drivers will build up a history of data to prove it. They will also benefit from reduced per mile charges. Despite the predicted rise in insurance premiums for young drivers, drivers with black box insurance trackers can build proof of a pattern of good driving to keep their premiums low
An easier process of recovery of funds due from third parties, through provision of proof of accident scenarios
Additional advantages include online dashboard reporting which allows a driver to:
- Store all documents online and access them at any time
- Calculate your driving style helping you drive safer
- Enables fuel saving by allowing a driver to see how they are driving in the most fuel efficient way
- Monitor the total amount of mileage driven and therefore cost
- Receive notification of when MOT, tax and insurance is due
- Calculate what situations increase your risk so helping you to drive more safely
What is Black Box Insurance?
Restrictions and conditions
Restrictions play an important in black box insurance, as they help insurers limit their financial risk and in doing so offer you cheaper policies.
Typically restrictions will include – to some degree – mileage limits, increased charges for driving at night, and driving reviews every few months (depending on your insurer).
While driving safely and within insurers’ restrictions can earn you ‘rewards’, driving that isn’t considered safe will be liable for much higher charges and raised premiums in the future.
This means black box insurance can end up more expensive than standard cover if you don’t use it correctly.
How to find the right policy for the right price
You’ll need to be honest about how you drive in order to decide whether this type of insurance is worthwhile, because your car insurance box gives an exact representation of your usage and charges you accordingly.
Firstly, decide what level of cover you require, you need to think about how and when you’re most likely to drive as well as how many miles you’re likely to cover each year .Then compare the black box cover offered by each car insurance provider to find the policies that meet your requirements.
You’ll not only need to consider the initial premium, but also the cost of installing and/or removing the car insurance box, and any penalties (in addition to increased mileage rates) applied if you drive during night time hours.
You should also check that you’re comfortable with how often your driving will be reviewed and the possible penalties or perks that will be applied.
Once you’ve narrowed your options you should compare black box car insurance quotes for all policies that give you the cover you want, to get the best price possible.
What Are The Disadvantages?
There are some disadvantages to these schemes:
Some disadvantages exist with this type of car insurance. For those drivers who drive consistently faster than the speed limit and drive erratically with excessive braking and acceleration or drive at times that are considered to be within the “rush hour” and for those who underestimate their annual mileage, or whose driving patterns change during the year, there is the uncertainty of how much the insurance will cost. This insurance would not offer advantages.
Portions of text reproduced by kind permission of http://www.money.co.uk
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