Telematics - the car insurance of the future?
The use of Telematics, or 'black box technology' for calculating car insurance premiums may be in its relative infancy but the well-known insurance company Direct Line, who only began an experiment with the technology about a year ago, already claim that some of their clients are achieving reductions of up to 40% in their premiums.
Although there is no age limit for having these devices fitted into a car the majority of drivers who've taken advantage of them are quite young; around 20% of Direct Line clients under the age of 25 have had them fitted, and around 50% of those under 21 who buy by telephone, and can therefore speak to advisers personally, have done so. Bearing in mind that premiums for young drivers often soar well into four figures the potential savings would appear to be very substantial indeed.
There are more advantages than just the financial ones however. A telematics system fitted into a vehicle encourages the driver to drive in a safe manner, and avoid the times when there are the greatest dangers on the roads, such as early in the morning or at weekends. As a consequence accident statistics are expected to show a substantial fall for motorists in this category. not only would this reduce the human toll in suffering and expense that accidents can cause, but it could also have a knock-on effect of reducing insurance payouts, and subsequently lowering premiums for all other motorists. Would a telematics system be right for you? A request for personal experiences brought the following reply:
Last year, I changed my regular policy for a telematics one. This "black box" method resulted in some advantages and drawbacks. Let us take a look at what I discovered.
One of the first aspects I had to consider was data collection. Would the insurer use it to profile me in any way? I was concerned that information such as where I visited and my driving habits may be passed on to third-party organisations. I was informed that this was never allowed without my consent. However I confess that doubts persisted for a while.
The main benefit I found was that telematics enabled a policy to be tailored around my specific needs. As I mainly used the vehicle for work purposes, I was able to receive reduced rates that would have been nearly impossible in regards to a standard policy.
My Driving Habits
One interesting aspect that I noticed immediately after the device was installed was that I was driving more carefully. This was obviously due to the fact that such data as speed and braking frequencies were being measured. In effect, I believe that (in my case) telematics actually has made me a safer driver. This may have not been the case had I continued to employ a more traditional policy.
One downside that I learned after a few months was that it would be more difficult to change providers. Unfortunately, this had not been made abundantly clear to me when I first encountered the policy. This situation arose from the fact that different insurers collect information in different ways. Some companies will refuse to accept this data from a previous provider.
Replacing a Vehicle
I decided to purchase a new work van halfway through my policy. This resulted in a further disappointment, for I was charged an additional fee for the removal of the "black box" and its installation into my new vehicle. While this was made clear within the terms and conditions of the initial contract, it was nonetheless a bit frustrating.
In my opinion, telematics have been an excellent addition to my existing policy. While changing providers can be challenging and a fee was required to replace the electronic monitoring system, these issues have been offset by the cost savings that I have subsequently enjoyed. Although telematics may not be for everyone, I have enjoyed this new technology.