Many people have never heard of telematics before, despite the technology being around for more than ten years.
Insurance is one of the biggest costs for car buyers and if you’re frustrated at having to pay a high premium, telematics could be the answer.
Also known as ‘black box’ technology, telematics devices monitor your driving behaviour to help insurance companies find out how well you drive to more fairly price your car insurance premium.
In this guide we take a closer look at how telematics works and the pros and cons of adopting the technology.
What is telematics?
A telematics system is a small box, about the size of an average smartphone, usually installed beneath the dashboard of your car.
Frequently used in company cars and vans as a way for fleet managers to improve utilisation and cut costs, the technology is now becoming more widely adopted by retail car buyers to help reduce insurance premiums.
By tracking your vehicle’s movements through GPS systems, telematics enables driving behaviour to be recorded an analysed. Everything from acceleration, braking and speed as well as your location and the amount of miles you travel, the time of day you drive and the length of journeys are monitored.
Who is it ideal for?
When an insurance company calculates your monthly premium, quite a few factors are taken into account including your age, previous claim history, value of the car, how many miles you drive and where you park your car at night.
The higher the insurance premium indicates the amount of risk involved for the insurance company in providing you with cover.
If you are placed in a high risk group than your premiums are going to be expensive and it can take years for you to fall into another category. Telematics is a way to help prove you are a safe and conscientious driver on the road. Those more likely to fall into high risk groups are inexperienced drivers, young drivers and those with low annual mileage.
Be warned though, it isn’t for everyone, if you’re already paying a low monthly premium you could see your premiums increase. Especially if your driving habits are deemed bad by the insurance company or most of your annual mileage takes place in rush hour or late at night.
By adopting a smoother driving style and staying within the speed limits you could improve your premiums with telematics. It will also record how often you drive, when and where, which could also affect the price though.
How do you get it installed?
Selected insurance providers will fit the device for you. Not every company offers this though so you need to do your research before you sign on the dotted line.
Some insurance providers will build the cost of the installation into your insurance premium too so its worthwhile checking the small print.
Important things to consider
Telematics is designed to reward good drivers, so the flip side is that drivers with bad habits will see their premiums increase.
It’s worth bearing in mind that some insurance companies may impose curfews or charge extra for driving at peak times.
If you regularly exceed the speed limit the telematics system will pick it up and it could cause your insurance premium to go up or even cancel the policy. Driving on roads known to be accident black spots will increase your premiums with some providers too.
The devices often can’t differentiate between drivers so if there is an additional driver on your policy, such as your son or daughter, and they aren’t as good a driver it could negatively affect your premiums.
There is also the issue around privacy, having your movements recorded can be unsettling for some and feel like ‘big brother’.
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