Car Insurance Buyers Guide:
What are telematics?
Telematics in car insurance refers to the use of
technology to monitor how a car is being driven in order to calculate a
suitable premium.
A telematics 'black box', that is roughly the size of a mobile phone,
is fitted into the engine compartment. The box checks parameters such
as speeds, times and locations of driving, distances travelled and
g-forces when braking or cornering.
The telematics box automatically relays the data collected to the car
insurance provider's monitoring service and that data is used to
calculate the premium on an ongoing basis.
The idea with telematics is that the safer your driving is, the less
you will pay for your car insurance and many young drivers have been
able to save £500-700.
At present, telematics policies are mainly marketed to young drivers as
it is the under-25s that can make the biggest savings. The current
biggest provider is the Co-op's
'smartbox'.
It is likely that telematics will be more widely available in the
future as any safe driver should be able to make some savings on their
car insurance with it.
Telematics is particularly useful for teenagers that can face car
insurance premiums of £4,000 or more.
When women lose their gender advantage in the calculation of their car
insurance premium which will happen as of 21 December 2012 when the ECJ
gender directive takes effect, telematics will become the best choice
of car insurance for any women under 25 who will otherwise see an
increase of 25-50% in their premium.
As more young drivers have become aware of telematics, its uptake has
accelerated to the point where the Co-op smartbox (link above) has
become a popular choice.
For those young drivers unwilling or unable to drive carefully, use of
telemetics can lead to an increase in the premium but, clearly, the
presence of the monitoring box will encourage safer driving which will
have a significant effect on accident rates among young drivers
assuming that a large number of young drivers will choose a telematics
car insurance policy as seems likely once knowledge of the availability
and convenience of this technology is more widespread.
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