Telematics Insurance explained

 
 

Insurance is one of  the most painful things about being a young driver – or a young driver’s parent, if you’re paying the premium. According to the GoCompare website,  the average annual motor insurance bill for an 18-year-old driver is £2100. Telematics (or ‘black box’) insurance is one way to reduce the price of cover and encourage good driving habits at the same time.

What is telematics insurance?

If you and your child opt for a telematics policy, a ‘black box’ is fitted to their car. This combines a GPS unit, a motion sensor and a SIM card to transmit data. It detects where the car is, how fast it is being driven, and how violently the car is accelerating, braking and cornering.
How is the data used? The information the black box collects is fed back to the insurer, and used to reassess the young driver’s premium at regular intervals.

Obeying the speed limit, avoiding harsh acceleration and braking, and driving at low-risk times of day can all contribute to a reduced bill. In some cases there are other forms of reward or special offers for safe and responsible driving. This could mean extra miles are added to a limited mileage policy, or the driver receives vouchers and free gifts.

Can youngsters check how well they are driving? Yes. Telematics insurance providers usually have a portal or app through which drivers can see if their driving is up to standard. By checking back regularly they can tell if they are improving or slipping into bad habits.

Are parents also able to  see driving scores? Typically any named driver will have access to the feedback scores, so if you are named on the policy you’ll be able to see how well your child is doing. Some insurers have found that simply knowing that mum or dad can see their feedback improves young people’s driving.

Can I have a telematics policy with my child as  the named driver? There are plenty of telematics insurance providers who insure older drivers as well as youngsters. But don’t be tempted to name yourself as the main driver unless you really are going to do most of the miles. If your insurer finds out that you’ve fibbed about who is really the main user of the car, then you’ve committed fraud. It could invalidate your insurance cover. Also, if your child isn’t the main driver on the policy then they won’t build up their own No Claims Discount. So in the long run it’s best for them to be the main driver, even if the car is also sometimes used by a parent.

What are the drawbacks  of telematics insurance? Some policies set curfews that restrict young drivers from getting behind the wheel at night. Whether that’s a good or bad thing depends on your point of view. A teenager may be frustrated they can’t give their mates a lift home from the pub, but a parent may be relieved... Also, just as good driving
can be rewarded with a lower premium, so poor driving can lead to a higher insurance cost – even if the young driver hasn’t had an accident. That’s not universal, though. Some companies are all carrot and no stick, and don’t increase premiums for aggressive driving unless it has led to a claim.

Will my child face any restrictions? We’ve mentioned curfews, which are actually quite rare. Mileage limits are a lot more common. Generally these are set when the policy is taken out, and can be extended at extra cost. Some insurers offer bonus mileage as a reward for safe and careful driving.

Is telematics right for  me and my young driver? In most cases, yes. You should be able to find a better price by choosing a telematics policy rather than conventional insurance cover. And it encourages safe driving, too.

You can find out more information about car insurance and telematics products from our partners Adrian Flux here