/ Motoring, Technology

Is a black box the solution to rising car insurance?

Ever-increasing car insurance premiums are making a dent in drivers’ wallets. So can a black box installed in our cars, that reports our driving style to insurers, help lower the cost of driving?

At a time when household budgets are already stretched, most drivers are desperate to see the acceleration of car insurance premiums put into reverse.

While the government and regulators are trying to tackle some of the bigger underlying causes, there remains a short-term challenge for insurers. What can they do to help make their products more affordable when their customers need to be cut some slack?

The industry has responded in a number of ways. Some have scrapped benefits, like free courtesy cars for those whose vehicle is in the garage after a scrape. Others have introduced extra charges, such as fees for sending out duplicate certificates.

But perhaps the most interesting innovation has been the development of so-called ‘telematics’ – insurance policies that are based on each policyholder’s actual driving practices.

The little black box

Telematics work by installing black boxes in your car. Using GPS, this reports back to the insurer at regular intervals about how you’re driving. Factors that are taken into consideration are the times that you drive, the speed you drive at, how fast you accelerate and brake, and even how well you corner.

Such systems are used by commercial haulage and transport companies as a means of ensuring their staff are driving responsibly. But they’ve only recently started to gain traction in the insurance industry.

At first they were targeted at younger drivers, who suffer most acutely from high car insurance premiums. Now, they’re being offered to anyone who’s interested.

The benefit of telematics is that it encourages good driving. If you drive poorly, your premiums may rise, so the financial incentive to slow down or stay home late at night increases.

Will you take up telematics?

But the response you’ll get from most people is that telematics sounds a bit Big Brother. The idea that you might get financially penalised for absent-mindedly slipping over the speed limit makes people nervous.

And, although most insurers say you wouldn’t get punished for occasional misdemeanours, drivers understandably feel vulnerable with all that information in their insurer’s hands.

The documents that accompany some of the new telematics based insurance policies don’t help matters either. Although most policies infer that you’ll be rewarded for good driving (rather than penalised for bad) some policies are worded loosely enough as to leave plenty of doubt as to how it’ll work in practice.

So if these ‘black boxes’ catch on, they certainly have the potential to change the way we drive as a nation. But until the industry starts to better define how your data will be used, would you be willing to get one installed?


There needs to be transparency, ie an agreed standard of what is considered acceptable which is known and understood by all parties. It shouldn’t be left to the subjective judgement of the insurers. Furthermore how does it work if a car is used by more than one driver?

Mr Iain says:
22 December 2011

As usually it is the car that is insured, then this wouldn’t make any material difference. However, it wouldn’t be beyond the wit of man to develop the technology so that the back box can recognise the driver, for example by use of fingerprint readers, smart cards, or even by the ignition key in use at the time.

As a young driver, I looked into one of these ‘box’ schemes about a year ago when the Co-Op insurance launched their ‘solution’ to the extortionate prices young drivers face.

On the surface they seem like a great idea, basically you’re rewarded with cheaper premiums by driving carefully.
In reality, they often work out much more expensive.

My ‘estimated’ yearly premium from the Co-Op if I drove well was more than double that of a normal, non-restricted car insurance policy from another company. I’m sure you can guess which I went for!

Mr Iain says:
22 December 2011

Yep – I found exactly the same when trying to source car insurance for my 18 year old son. I fully agree this is an excellent way to go, but am genuinely puzzled how it can possibly work out more expensive (about 60% more) than a standard policy.

Just another ruse to make you “think” that you are saving money as demonstrated by tpoots above.

Good to see that they have our best interests at heart eh? 🙂

Meanwhile, even I am amazed at my own enthusiasm for this sort of kit, and for me it is just the start. I hope that in twenty years we will all be driving cars that cannot go ‘dangerously’ fast, that certainly cannot override 20mph signs, that will not collide, have lots of extra safety based features.
I am not an eco-warrior, but I don’t know how long we can tolerate the aggresive driving that we all see every day. On a positive note, I would want to see the same technology ensure that ‘dawdlers’ are up to and keep up to the speed limits.
And this is all coming from someone who has in the past demonstrtated AGAINST this sort of kit being installed on motorcycles, where you really do require manouvreability in every respect.

Mr Iain says:
22 December 2011

It would worry me that there should be a requirement to “keep up to the speed limit”. While I wholeheartedly agree that those that drive unnecessarily (or perhaps obstreperously) slowly cause delays, inconvenience and danger, speed limits are, in fact, maxima, and actual speed should be determined on the basis of the road conditions and the prevailing situation – not by a black box that thinks you’re not going fast enough.

I agree with Mr Iain’s comment on this one. A couple of weeks ago on “hurricane Thursday” in Scotland we were driving south on the motorway when we drove into a massive rain and hail squall and even stronger winds. Visibility was instantly reduced to around 30m. All the traffic slowed to around 15 to 20mph for a couple of miles until it cleared. How would the black box deal with this?

I agree with Phil that the lack of transparency is an issue.
For the average motorist there is probably little benefit, for those with lower miles, no commuting etc there may be benefit of being accessed as lower risk.

The insurance companies will only be able to sell the black box approach by offering a capped premium with the box giving the potential for a refund or a lower premium next year.

Mark Feltham says:
22 December 2011

To my mind this is a gross invasion of privacy. Insurance company’s will use the information for other purposes. They should not be permitted to track people under the guise of saving the insured money, which a reader has already said they have found not to be the case.

Absolutely agree, this is a gross invasion of privacy. Driving is a skill based activity and the best indicator of future performance is your past record. I think it also leaves drivers very vulnerable.- If you were 5 mph over the speed limit, even if everyone around you was doing 15 over the limit, would the insurance company use this as an excuse to decline covering an accident? I also don’t see why an organisation that makes no guarantee of preserving my privacy should have data of all my movements. This is worse than phone hacking!

Why is it an invasion of privacy if you are agreeing to it ?

This system has no chance of working fairly. It cannot allow for other vehicles or obstructions on the road which do not have a ‘black box’ fitted. So apart from speeding or amount of driving, nothing can be assessed with any accuracy. So I am afraid it is a NO from me

Surely its aim is to measure how much you use the car , when and where.
There will be data relating this type of data to claims and thus allow for tuning the insurance premium to the individuals usage pattern.

Mr Iain says:
22 December 2011

But, how often do obstructions or other vehicles cause you to take evasive measures to the extreme that it would register as “bad” on the black box? It happens to the best of drivers (those that read the road ahead, and anticipate what is happening/about to happen around them) on rare occasions. Insurers will be looking for patterns of driving that indicate the level of risk to which they are exposed – infrequent occurrences of evasive action won’t build up a pattern against a backdrop of “good” driving. Frequent occurrences will, of course, and that would be a fair representation of the risk to which the insurance company is being exposed.

J.M.Sleigh says:
23 December 2011

Yes I’m all for this technology,anything to drive (pardon the pun), down the cost of motering.
Mind you,it’s come a bit late for me as I’m in my 70th. year and only drive 3-4000mls a year now.
Perhaps it could be linked to the road fund license as well as it costs me as much to put my car on the road as somebody drivind 40-50 thousand miles per year. All parties bleat on about “tranparent government”, and a “fairer Britain for all”now’s their chance to do something abiut it. As the saying goes “We have the technology”, use it !!!!!!!!!!

J.M “Mind you,it’s come a bit late for me as I’m in my 70th. year and only drive 3-4000mls a year now.”
You probably have the type of car use which would benefit from the “black box” approach.

Philip Simpson says:
23 December 2011

Never mind trying too find out how fast you drive etc, better that they trap those Drivers who regularly use their Mobile Phones while at the Wheel.

Just another ruse so that Motor Insurance companies can increase premiums, because their interpretation of the results from the ‘black boxes’ will be substantially different from the ordinary motorists view.

I am fortunate in having only been involved in two RTAs in 54 years of driving, both of which were caused by other drivers, one who turned right without signalling and was prosecuted and the other failed to stop at a Halt sign and was prosecuted. I want tp buy and install a “black-box” device in my car for my own protection should I ever be unlucky enough to be involved in another RTA – hopefully it would prove which of us was to blame.
I cannot understand why good, careful, law-abiding drivers would object to having such devices installed.
I would be grateful if the Consumers Association would test and report on the devices available and come up with a recommendation for a “Best Buy”.

Black Box Insurance Reviews

There are already products on the market that record and monitor your journey with both forward and rear facing cameras. There are a growing number of insurers who will offer substantial discounts for drivers who install this system.

It is also excellent for detering crash for cash fraudsters.