Black box insurance (or less commonly known as telematics insurance) uses technology to monitor various aspects of your driving and can reward safer drivers with lower insurance costs. Unlike traditional car insurance policies that rely mainly on your age, location, and vehicle type, black box policies look at how well you actually driveThis guide breaks down the topic and explains everything you need to know about this increasingly popular insurance option.
What Is Black Box Insurance and How Does It Work?
Black box insurance uses a telematics device to track your driving behaviour. This device is normally either a physical box installed in your car, a plug-in device, or a smartphone app which then monitors your driving.Every Black Box device and insurance company will monitor and grade slightly differently, but in general insurance companies are looking for things such as:
- Your speed and whether you stick to speed limits
- How smoothly or harshly you brake
- Acceleration patterns
- How you take corners
- What times of day you drive
- Your total mileage
Your insurance company then uses this data to calculate a driving score that is a weighted average which attempts to predict how safely you drive or how likely you are to be involved in an accident.Good scores can lead to lower insurance costs when it comes to renewal, while consistently poor scores might result in insurance costs or even policy cancellation.
Statistics show this approach works particularly well for new drivers, with 78% of 17 to 20-year-olds able to get cheaper insurance with black box policies compared to standard car insurance [1]. Young drivers aged 17-20 can save an average of £1,137 annually with telematics policies [1].
Types of Black Box Insurance
There are several types of telematics insurance available, each with its own advantages:
Traditional Black Box
A small device which gets professionally installed in your car and continuously monitors your driving. It's the most accurate option but requires professional installation and can't be easily transferred between different cars.
Plug-in Devices
Small devices that plug into your car's cigarette lighter or OBD port. They're easy to install yourself and can be moved between vehicles, but may not collect data when unplugged.
Smartphone Apps
Apps that use your phone's sensors to track your driving without any additional hardware. These are the most convenient options but require your phone to be present and charged during all journeys. Zego currently offers a no black box service where we instead use an app to track driving habits.
Benefits of Black Box Insurance
Lower Premiums for Safe Drivers
The most obvious benefit is the potential savings when it comes to renewal time. Black box insurance can be up to 39% cheaper than standard cover for young or new drivers [2]. As you build a history of safe driving, these savings can increase over time.
Improved Road Safety
At the time of writing black box insurance has contributed to a 35.32% reduction in collision rates for 17-19 year olds over a six-year period [1]. Casualties on the road for drivers aged 17-19 have fallen by 35% since 2011, coinciding with the rise of black box insurance [1].
Evidence in Accidents
Telematics data provides objective evidence about what happened in an accident, potentially helping to prove you weren't at fault and speeding up claims processing.
Vehicle Recovery
Many black box policies include GPS tracking that can help recover your car if it's stolen. Some insurers report recovery rates as high as 95% for vehicles with telematics devices.
Potential Drawbacks to Consider
Privacy Concerns
The constant monitoring raises privacy questions for many drivers. Around 62% of drivers express reservations about this level of monitoring [3]. Before signing up, understand exactly what data is collected and how it's used.
Driving Restrictions
Some policies impose restrictions on when or how much you can drive. Night-time driving might affect your score negatively, and some policies include mileage limits. These can be problematic for shift workers or those who drive unpredictable hours.
Premium Fluctuations
While good driving can lower premiums, poor scores can increase them. Factors outside your control (like having to drive in bad weather) might negatively affect your score.
Additional Fees
Watch out for extra costs like installation fees, charges for missed appointments, or fees for transferring the device to a new vehicle.
Black Box Location and Installation
The most common location for a black box is normally fitted behind ar car's dashboard where it's hidden from view but can still effectively monitor your driving. This is the most common location chosen by insurers when installing telematics devices. Some black boxes are alternatively fitted under the bonnet, connected directly to your vehicle's electrical system, or occasionally positioned under the driver's seat for more straightforward access
Market Growth and Future Outlook
Currently, insurers only offer telematics policies to approximately 5% of the driving population [1]. However, adoption is growing, with 12.7% of individuals under 30 using a telematics policy via an app or smart device [1]. As technology improves and becomes more seamless, this percentage is likely to increase.
Frequently Asked Questions
How long do you have to have a black box for?
There isn’t a set time period that you must have a black box installed. While most insurance policies run for 12 months, what happens after this depends entirely on your insurance company and your preferences. Many drivers keep their black box for 2-3 years until they've built enough driving history to receive competitive quotes on a standard car insurance policy. However, younger drivers may benefit from longer telematics periods, while experienced drivers might only need one policy term to demonstrate their safe driving.
The decision to continue with telematics insurance or switch to conventional coverage at renewal remains completely yours, with no industry-wide requirement dictating a mandatory duration for black box use. With app-based solutions like Zego's Sense, the transition between telematics and conventional insurance is even more seamless as there's no physical device to install or remove.
How much does black box insurance typically cost?
On average young drivers aged 17-20 can save over £1,000+ annually with telematics policies, while drivers under 25 can save an average of £380+ on their insurance premiums [1]. The cost of black box insurance will vary widely depending on your circumstances.
Will I have driving restrictions with a black box policy?
Most modern black box policies don't impose strict curfews, but they may consider when you drive when calculating your score. Check the policy details before committing.
Can someone else drive my car with black box insurance?
Yes, but their driving will affect your score. Make sure anyone who drives your car understands this and drives carefully.
How is a black box fitted?
Traditional black boxes are installed by professional engineers, typically behind the dashboard. Plug-in devices can be self-installed by yourself, while app-based solutions just require downloading an app and following the instructions set by your insurance company.
Zego's Telematics Insurance
Zego offers app-based telematics insurance called "Sense". Our easy to use smartphone based solution means there's no need for physical black box installation. Here's what Zego currently offers telematics coverage for:
- New driver car insurance: Comprehensive coverage for new drivers with potential premium reductions upon renewal for safe driving
- Private hire taxi insurance: Designed for self-employed taxi drivers working independently or with providers like Uber and Bolt
- Van insurance for business use: Tailored for contractors, tradespeople and business owners using vans for work purposes
- Van insurance for personal use: Coverage for personal trips and everyday driving in vans
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Sources
[1] British Insurance Brokers' Association (BIBA) and Automobile Association (AA) Young Driver Safety Report, 2023 https://www.biba.org.uk/latest-news/young-driver-telematics-report-2023/
[2] Association of British Insurers (ABI) Premium Tracker Report, 2024 https://www.abi.org.uk/products-and-issues/topics-and-issues/insurance-premium-tracker/
[3] J.D. Power Insurance Digital Experience Study, 2022 https://www.jdpower.com/business/press-releases/2022-us-insurance-digital-experience-study
[4] Transport Research Laboratory (TRL) Road Safety Analysis, 2023 https://trl.co.uk/research-topic/road-safety/