What is black box insurance and how does it work?

This guide explains what black box insurance is and how it works, as well as examining the pros and cons of this type of insurance cover, especially for young and inexperienced drivers.

So, your question is: what is black box insurance? We’re here to explain what it is, and how black box insurance works. We’ll talk you through the advantages and disadvantages of black box insurance to help you decide if it’s worth it.

Remember, you can buy a brand new or used car right here on Carwow. And you can sell your car, too. We’re here to help you through every step of your car-changing journey.

What is black box insurance?

Black box insurance uses a device in your car to give feedback on your driving to the insurer. Also known as a telematics insurance policy, this type of cover helps to make insurance for young and inexperienced drivers more affordable.

While younger drivers are a key market for black box insurance, telematics policies are available for drivers of all ages. Senior drivers who get behind the wheel less often than they used to are another group who can benefit from a black box policy, as it helps to demonstrate that they can still drive well.

How does black box car insurance work?

Black box, or telematics insurance, uses a GPS tracking device to keep tabs on your driving.

Some devices may be installed by the insurer, but often it’s a DIY job. You may have a black box attached to your windscreen, or a plug-in device fitted to the 12V socket in your car. Other policies use a smartphone app which employs the GPS signal in your mobile phone.

Whether you have a device or an app, the tracking lets the insurer know where and when you are driving, whether you are obeying the speed limit, and also how hard the car is accelerating, braking and cornering. It also knows how far you travel. This information is used to score your driving.

The hope is that because you know someone is keeping tabs on how you drive, you will stick to the rules. This is especially useful in influencing the behaviour of high-risk groups such as young drivers.

Drive well, and your insurance should come down when it’s time to renew. With some insurance, the cost of cover could change mid-policy.

The flipside is that someone who drives badly could see their insurance costs rise, even if they don’t have a crash or need to make a claim. Really bad driving such as regular excessive speed could see the policy cancelled, although it shouldn’t come to that if the driver acts on feedback from the insurance company.

How much does a black box reduce insurance?

A black box policy can reduce insurance costs because it allows for each driver to be treated as an individual. The size of the reduction will depend on the insurer and the driver’s circumstances.

With a conventional insurance policy, all sorts of factors are taken into consideration when deciding on a premium. One is the car’s insurance group. Another is the policy holder’s driving record.

For a new driver with no track record for the insurer to consider, there’s not a lot to go on. As young drivers tend to be higher risk and involved in more collisions than older drivers with more years on the road, insurance premiums for young drivers are very high. The average 18-year-old pays £2,342 per year, according to research by Confused.com.

What if you are a safe driver, but don’t yet have years of claim-free driving to prove it? Well, that’s where a telematics policy can help. The black box will let your insurer know that you are driving carefully and obeying the speed limit. This helps to build a picture of your driving for the insurer and means that safe driving can be rewarded with a lower premium.

There’s both carrot and stick at work, here. Bad driving will be immediately obvious to your insurer – some will even contact a driver if they notice regular speeding or other bad habits. Even if they don’t contact you directly you should see the feedback through the insurer’s app.

Because a telematics policy encourages and rewards good driving, black box insurance is usually cheaper than a conventional policy for young and inexperienced drivers.

On the other hand, if you have decades of driving, a clean licence, and several years of no-claims built up, a telematics policy may not offer any advantage over a regular policy with no black box installed.

Advantages and disadvantages of black box car insurance

There are pros and cons to a black box insurance policy. Here are some things to consider before deciding if black box insurance is right for you or a member of your family.

Advantages of black box insurance

• Good driving is encouraged: If you know Big Brother is watching, you’ll want to stay out of trouble. So a black box policy encourages safe and careful driving.
• Safe driving is rewarded: You can expect a lower premium when you renew if you drive well. Some insurers offer other benefits, such as extra miles on a limited mileage policy or vouchers and special offers.
• A black box helps you improve: Telematics policies usually have an app so that drivers can check how they are driving and find areas in which they could do better.
• Insurance is more affordable for high-risk drivers: It’s not easy for a newly qualified driver to afford insurance, which can cost more than the price of a first car. By making insurance more affordable, black box policies can make the difference between getting on the road straight after passing or waiting and saving for a year or two.
• Evidence when making a claim: If you do need to make a claim, a black box can prove that you were driving within the speed limit when a crash occurred.

Disadvantages of black box insurance

• Bad driving could lead to a higher premium: If you don’t drive by the book, you may find your premium goes up if you use a black box policy. For example, regular speeding could push up your premium, even if you have a clean licence. Drive really badly and ignore warnings from your insurer, and you could even have your policy cancelled.
• Late night driving is discouraged: It doesn’t always pay to be the designated driver. Being on the roads in the early hours is something some black box policies often discourage. That’s not just a problem when giving mates a lift home from the pub or club, it’s bad news for anyone who works night shifts. Be sure to check the insurer’s stance on late night driving before you agree to the policy. The odd night out is usually no big deal, but regular driving in the small hours can hurt your driving score and push up your premium when it’s next revised.
• Mileage is usually limited: Most telematics insurance policies will have a mileage limit, agreed between the driver and insurer when taking out the policy. Take care not to exceed the limit without telling the insurer first – you should be able to increase the limit, but at a price.
• Someone else’s driving may affect your score: A black box won’t know who is driving. So for a young driver who shares a car with their parents, this could mean a bad score if mum or dad is caught doing 90mph on the motorway. Make sure anyone else who borrows the car drives responsibly.

How is a black box fitted?

Insurers used to have black box kits that needed to be professionally installed. These days it’s much more common to have a DIY-fit black box or even a small tab which sits on the dashboard or windscreen. Or the insurer may supply a plug-in device which fits in the cigarette lighter in your car.

Whatever the exact type of device, installation usually takes just a few minutes.

If you change cars, you’ll need to move the device across if you continue your blackbox policy with the same insurer. That’s easy with a plug-in device, but more complicated with a professionally fitted box. So there may be a fee for this.

Is black box insurance worth it?

For young or newly qualified drivers, yes, black box insurance is usually worth it. Lower premiums, feedback on your driving, and the opportunity to pay less when you renew are all good reasons to choose black box insurance.

There are disadvantages, especially if you choose a policy that’s picky about when you drive. However, these are usually minor inconveniences compared with the benefits of telematics insurance.

New drivers are the main market for telematics policies, but the same technology can also help senior drivers prove that they are still safe and able when they reach an age at which insurers become a bit fussy about covering older drivers.

Most of us will be somewhere between these two extremes. If that applies to you, there’s no harm in considering a telematics policy. However, the chances are that conventional insurance will be cheaper, especially if you have a long and clean driving history.

Black box insurance FAQs

Does a black box make insurance cheaper?

It depends. For new drivers, black box cover usually makes insurance cheaper. For more experienced drivers, it’s less likely to save money. In fact, it may be more expensive than normal cover.

Can I cancel my black box insurance?

Yes, you can cancel black box insurance. You should receive some money back if you have paid the full premium upfront, less a cancellation fee. If you cancel your black box insurance, you will need to find alternative cover to continue driving your car.

Do insurance companies share black box data?

No. Strict data laws mean this must not happen. However, they can share data with you as the policy holder in the form of driving feedback to help you improve and lower your premium.

Can you go out past 12am with a black box?

These days it would be very unusual for a black box policy to have a strict curfew banning driving in the early hours. But regular driving after midnight can lower your driving score. If you expect to drive late at night check how this will be treated by your insurer before you commit to the policy.

Can a black box tell who is driving?

No, the black box can’t distinguish between different drivers. So, be very careful about letting someone else drive your car. Anyone listed as a named driver on the insurance should be someone you trust to drive carefully and obey the speed limit, or they could mess up your score.

Does a car black box record audio?

In an aircraft, yes! In your car, no!

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