Is telematics insurance best for me?

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What Car? Staff
20 Aug 2012 10:17 | Last updated: 14 Jun 2018 00:03

So-called telematics car insurance is becoming increasingly popular with drivers who face higher-than-average annual premiums.

Insurers offering cover of this kind, which is mainly aimed at younger motorists keen to reduce their premiums by proving that they are safe drivers, include the AA, Insurethebox and Coverbox.

Some people are uncomfortable with the Big Brother nature of telematics insurance policies, though and not everyone benefits from taking out cover of this kind, with some drivers ending up paying more than they would with standard car insurance.

Here, we investigate the pros and cons of telematics policies so that you can decide whether cover of this kind is right for you.

How does telematics insurance work?
A telematics insurance policy involves having a small computer or box, about the size of a packet of playing cards, installed in your car to monitor your driving habits.

The cost of the box and its installation is generally included in the premium, which can often go up or down depending on the information collected.

With the AA, for example, the Drivesafe box tracks your speed, braking and cornering style, the time of day you tend to drive and the types of road you travel on.

Should the data collected indicate that you are a safe driver, the AA claims that your premiums could start to fall within 60 days.

On the other hand, those seen exceeding speed limits, cornering sharply, breaking heavily or driving a lot at night are likely to see their premiums rise instead.

With Insurethebox, meanwhile, you can earn bonus miles which increase the mileage you can do for the amount you pay by driving safely.

However, premium reductions only come into play once you have a full year of driving data under your belt.

How exactly is my driving evaluated?
The data collected by the telematics box in your car is likely to focus on four main areas: Speed, Traffic anticipation (breaking), Landscape following (cornering) and When & Where.

Your mileage will also be measured, with those driving fewer miles generally being rewarded with lower premiums.

Having your movements tracked in this way may make you feel uncomfortable, in which case telematics cover is probably not for you.

However, you can generally view the data collected on your driving online, allowing you to improve your road safety and reduce the chances of you being involved in an accident.

Can I benefit from telematics insurance?
According to the British Insurance Premium Index, drivers aged between 17 and 22 pay around 40% more for car insurance now than they did in 2010.

Telematics policies offering a way for them to cut these costs are therefore likely to appeal to motorists in this age group, as well as anyone who pays more for cover due to previous convictions, for example.

As the cover is being offered with gender-neutral premiums, it is also particularly likely to appeal to male drivers, who will continue to pay more for car insurance until new European laws come in on December 20.

The good news is that the savings can be significant if you are found to be a safe driver.

AA research indicates that young, inexperienced drivers could cut costs by 850 a year by opting for insurance of this kind.

Remember though that you could end up paying even more than before if you are seen to be taking risks.

What are the alternatives?
There are other ways to reduce your insurance premiums if you do not think that telematics cover is for you.

These include keeping your car in a locked garage overnight which could reduce your premiums by around 5% - and adding an older, more experienced driver, for example, as a named driver on your policy.

Shopping around for the best deal remains the best way to find the cheapest car insurance, though.

Independent research conducted in May this year shows that a third of drivers could save 400 a year by using MoneySupermarket to compare policies.

This article has been researched and written by whatcar.com's car insurance partner, MoneySupermarket