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Your quick guide to: telematics insurance

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Find out how pay-as-you-drive insurance could save you money and even improve the way you drive.

Telematics car insurance – sometimes called black box insurance, pay-as-you-drive or pay-how-you-drive insurance – could help to lower the cost of owning a car.

Scott Kelly, head of motor for, takes us through the basics.

What is telematics?


Telematics car insurance is based on actual driving behaviour and involves having a GPS-enabled ‘black box’ fitted under the dashboard of your car to track the way you drive. The box records and transmits data back to your insurer about your driving habits.

How does it work?


Depending on the insurer, the telematics box may monitor different types of driving behaviour which can be used to either reward or penalise you for your driving by reducing or raising your premiums accordingly.

Usually, the sort of information collected by the telematics box will include things like; your mileage, the speed you drive, the time you travel, your braking and accelerating and other driving habits.

The way in which your driving affects your premium may vary from one insurer to the next, with some only adjusting your premium at renewal, while others may do this at regular intervals through your policy.

Who can benefit from telematics policies?


Young, inexperienced motorists, and drivers who have a low annual mileage are the most likely to benefit from a telematics policy. By taking information about the actual driver, telematics policies can significantly reduce premiums for drivers who are generally considered to be ‘high risk’.

Traditional car insurance policies work out risk based on generalised assumptions on driver groups. By opting for a telematics policy these high risk drivers can effectively prove that they deserve lower premiums than the traditional policies may offer them.

Are there any drawbacks?


If you are clocking up a high mileage or prone to driving faster than you should be then telematics insurance might see you face higher premiums than traditional types of insurance.

Are more people turning to telematics insurance?


Telematics is a growing insurance product in the UK with an increasing amount of drivers considering taking out a policy.

Studies by showed that over half (57%) of all drivers expect to switch to a telematics-based car insurance policy by 2017, and that 30% of parents would recommend their child consider one.

With the rising cost of car insurance, telematics is increasingly being seen as a way to combat expensive premiums. While telematics can benefit some drivers, it’s important to understand what information is collected and how it is used to calculate premiums to make sure that telematics is something that would benefit them.



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