Black box insurance is a type of car insurance that involves placing a small device out of sight within a driver’s vehicle. It uses this device to measure how well policyholders drive to get safe drivers rewarded. This insurance sticks a small box in your car windscreen and downloads an app to trace your driving habit.
Black box insurance is also referred to as telematics car insurance. It is a type of car insurance that uses technology to trace and record the driving behavior of policyholders. This insurance aims to charge premiums based on how safe or risky a driver is while on the road. Due to the result of this insurance, safe drivers may see reduced car insurance premiums. While others may end up paying more than they should with a conventional policy.
How Black Box Works
A black box is a technology device that uses different events to monitor your driving to determine where you should be charged a higher or lower premium. There are different ways a black box is installed, and sometimes no installation is required. Through a smartphone app, this device can be added without the need for additional hardware.
However, black box insurance policies are different with every insurer. Some policies monitor your driving constantly, reporting data every day, while some policies require you to use the box for a limited period. Other times, you may be monitored for up to three months, and after this period, you will be required to return the box to your insurer. Your insurance will then adjust your premium based on the collected data.
How Insurance Companies Use Black Box Insurance
Car insurance companies use black box technology for different purposes. Some insurance companies provide pay-as-you-drive or usage-based insurance policies to policyholders. With a conventional car insurance policy, drivers can pay a fixed premium determined based on the number of miles they cover during a certain period.
However, a pay-as-you-drive policy pays for only the miles the policyholder drives. The Black Box Insurance app helps the insurance company keep traces of this information. Other car insurance companies use the black box technology to primarily assess how much risk a policyholder poses. Safe drivers may be refunded, offered a bonus, or renewed their policy at a lower insurance rate by these insurers.
Benefits and Downsides of Black Box Insurance
There are several advantages and downsides to this insurance you should keep in mind before considering it. These benefits and downsides include:
Benefits:
- Lesser premiums on insurance renewal: This is one of the main benefits of this insurance is that it reduces premiums for safe drivers. Being a safe driver in the first year will get you lower premiums the following year.
- Safe Driving: This is the most important benefit because it encourages drivers to drive safer. After all, they are aware they are being monitored.
- Save on Car Maintenance: Because you drive more safely and efficiently, you will be able to save money on car maintenance like fluids and brakes.
- GPS Tracking: Due to the essence of a black box, your car can be tracked even when you are not behind the wheel. In cases where your car gets stolen, your insurance company can track your car’s location.
Downsides:
- Higher Insurance Premiums: Black Box technology does not guarantee you will qualify for lower premiums. If you have poor driving, you will be rewarded with higher renewable premiums.
- Restrictions: Some insurance companies may limit the times of the day you can drive or the miles you can cover. This may not be the best option for those who use their cars for work.
What Happens if I Speed with a Black Box?
Speeding is not advisable, especially with a black box. Speeding with a black box will affect your driving core negatively and can lead to higher premiums. Frequent speeding can also lead to your policy being canceled by your insurer or worse.
Is Black Box Insurance Right for Me?
While the black box insurance policy is often directed at young, new drivers. This insurance is best for safe drivers looking into reduced premiums irrespective of the driver’s age. Generally, young drivers are charged more premiums because they are considered at higher risk of insuring.
With this insurance, you get to show that you are a good driver and qualify for lower premiums. As previously stated, it tracks how and when you drive as well as other risk factors that calculate your driving score. With a good score, you can easily apply and get approved for cheaper car insurance premiums during renewal.