Black box car insurance saves drivers millions

Telematics car insurance policies have saved young drivers millions over the past five years, according to a new study.

Sheffield-based analytics firm The Floow, along with the Direct Line Group, found that motorists who take out telematics insurance, commonly referred to as black box insurance, saved a combined £50m over five years thanks to the reduced premiums offered by the policies, Auto Express reports.

The boxes, which analyse data including the location of a vehicle and the time it was driven, provided the two companies with two billion miles’ worth of driving data.

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Using this data, analysts found that motorists drove more safely when their journeys were recorded, which in turn saw their insurance premiums decrease over time, the magazine says.

Speeding and risky drivers, meanwhile, would see their premiums increase or their policies cancelled altogether.

What is black box insurance?

Black box insurance policies allow drivers to significantly cut their insurance by having a small telematics system installed in their car.

The aim of the boxes is to provide insurers with data about how you drive. This allows them to reduce your premiums if you drive within the rules of the road, while motorists who speed - or drive later than their policy permits - could be penalised.

The boxes record different information depending on the policy, but Which? says the data can include:

• Braking
• Cornering
• Steering
• Speed
• The time you drive
• Mileage

This form of insurance is particularly popular among young drivers, as traditional policies can run into the thousands for those under 21, the consumer watchdog adds.

Are there any drawbacks?

Yes. Motorists who cover a lot of miles “may not see any savings at all” and could even spend more on their insurance than a traditional policy, says MoneySupermarket. This mainly affects those who take out a policy with a mileage limit, or a restriction on what time of day they can drive.

There is also a slim chance that the insurance provider may not include the cost of covering the black box and its installation in the policy’s initial price, the comparison site says.

However, several insurance firms have moved over to smartphone apps in recent years, removing the need to install a telematics box.