Have you heard of black box insurance? Do you know what it is? While it sounds strange, this is a type of insurance that can be helpful for young, inexperienced drivers.
If you’re a driver under 25, then you’re already facing higher insurance premiums. This is because insurance providers see drivers 25 years of age and younger as a higher risk than older drives. The reasons for this are many including the lack of driving experience, the tendency to speed, reckless driving and more.
Black box insurance may be able to lower your premium, while proving you’re a good driver to insurers at the same time.
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What is Black Box Insurance?
Black box insurance, also known as telematics insurance, is a type of insurance used by insurers to track the driving habits of their clients. Based on this information, the providers determine the level of risk a client poses, they then use this to determine the client’s insurance premiums.
How does the insurer track a client’s driving habits? They do this through the use of a device called a black box.
How Does the Black Box Work?
The device is installed on your vehicle and monitors where and how you drive. The data collected by the black box includes the following:
- Speed: the black box will determine how fast you drive. It will show whether or not you mind the speed limit, if you speed through school zones and more.
- Steering & braking: it will show the insurer if you steer gently or not. The device will also show your braking habits, such as if you brake in plenty of time, are breaking too hard, or if you brake steadily.
- Mileage: the more miles you drive, the higher the risk you could be involved in an accident.
- Time: the device will detect the time of day you’re driving. If you drive at risker times such as rush hour or at night, the insurer may determine you’re a higher risk.
- Location: the black box will record where you’re driving. For instance, it will show if you’re driving in the country, through city centers or on busy roads.
All of this data will be used to determine your level of risk. Based on this, the insurance provider will determine your insurance premium.
If you have a black box installed in your vehicle, then careful driving could help to lower the amount of your car insurance premium.
The black box uses GPS technology to track the vehicle and your driving habits. There are three types of “black boxes,”:
- Black box: literally a box that’s installed on the vehicle by the insurer, which collects driving and GPS data.
- Plug-and-drive: this is a device that also uses GPS technology. This is a device you can install yourself. It just plugs into the cigarette lighter or the car’s charging port.
- Smartphone app: another type of “black box” is an app that some insurers use to track the car and driving habits. This is just an app you install on your smartphone that tracks your driving, where you go, etc. without the need to add a separate device to the car.
Can my Premium Be Lower with a Black Box?
The answer will depend on your driving habits. If the device shows that you speed, are a reckless driver or that your driving habits are otherwise poor, you could face higher premiums when it’s time to renew your policy. It’s also possible the insurer could even cancel your car insurance if the device shows you’re a dangerous driver. However, some insurance companies will offer what’s called a “three-strikes-and-you’re-out” option.
What does this mean? The insurance provider may offer you three chances to show you’re a good driver. If you fail each time, then you may face a higher premium, or your policy could be cancelled. And just the opposite, if the device shows you’re a careful driver, your premiums could be lowered.
You may need to pay higher rates until the annual renewal comes up. But if the black box shows you’re a good driver, then you could very well have a reduced premium for the next year. In addition, some insurers offer a monthly reviewal of your driving habits. In this case, your driving is analyzed on a monthly basis, and your premium is adjusted accordingly.
If you’re on a tight budget and are not able to accommodate monthly changes in your car insurance premium, then it’s best to search for a provider who will keep the premium at the same amount throughout the duration of the contract.
Who is Black Box Insurance For?
This type of insurance is most often used on drivers who are seen as high-risk by insurers. This type of insurance is best for:
How is the Black Box Device Installed?
The insurer will make arrangements for you to have the black box installed by a third party of their choice. The device is small and is usually placed in a location that’s discreet. Most of the time it’s in a place where you won’t see it.
After the black box is installed, the insurer will begin receiving data on your driving habits. This data will then be used to determine your premium.
This is a great opportunity to prove that you are a safe, responsible driver. The insurer will have proof of your good driving through the data obtained by the black box.
What if I’m Over 25 – Can I Still Get Black Box Insurance?
Yes, it could be helpful, but it does depend on your age. According to research, a black box insurance policy was most effective in lowering insurance rates for drivers between the ages of 17 & 20. After this, the effectiveness drops for those who are older.
However, drivers between the ages of 30 & 39 were still able to benefit from lower rates. The next age range to find black box insurance helpful were drivers between the ages of 50 & 64.
Are Fees Charged for Installation of the Black Box?
Yes, there could be fees you’ll have to pay if the black box device is installed on your car. There are not charges for plug-and-play devices or smartphone apps. For black box installation, your insurer may charge for the following:
- Installation: to have the device installed by their approved installer
- Removal: when the policy ends, and the insurer no longer monitors your driving
- Transfer/reinstallation: if you change the car that’s being monitored
- Repair/replacement: if you damage the black box.
Does Black Box Insurance Require a Curfew?
This varies, but some insurers do have policies that require a curfew. As a result, it’s a good idea to read through all the terms and conditions so you know exactly what’s covered and what’s required from you under the policy.
Can I Review my Black Box Data?
Yes, you will be able to review the information the black box records about your driving. This is a good opportunity to see where you may have any driving issues, and then work to improve in those areas. It could mean a lowered premium.
Could the Black Box Help Me?
Yes, but it will depend greatly on your driving habits. If you drive carelessly, then the insurer will not lower your premium; instead, they may even raise your car insurance premium. In instances, they could even cancel your car insurance policy.
Does the Insurer Share My Data?
No, your black box data will not be shared with any other organization. The only time it may be shared is if the police request to see the data in regard to a criminal investigation. Otherwise, your data is kept private.
Can I Drive Where I Want with a Black Box?
It will depend on your policy. Some insurers do have restrictions on where clients can drive. And if you drive long distances or travel quite often, then a black box may be too restrictive. Again, this depends on the policy, so make sure to read through the fine print to see if there are restrictions on where you can drive.
As you can see, black box insurance can be a huge benefit by helping to lower your insurance premiums. It just depends on your driving habits. You’ll find black box insurance helpful if you’re a careful, safe driver, especially if you’re 25 years of age and younger.