You are here: Home - Insurance - News -

Your quick guide to: telematics insurance

Written by:
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.



Tag Box




Financial fitness

There are 0 Comment(s)

Spreadbetting hub

Click here to find out everything you need to know about spreadbetting

Is your mortgage fully protected with critical illness?

For a free quote or to speak with an insurance expert call 0800 1218744

Guide for First-Time Buyers

Download our free, handy guide for first-time buyers, produced in association with the Post Office.

BNY Mellon launches investment guide for women

BNY Mellon has produced a free ‘Guide to Investing for Women' to provide an introduction to investing and lo...

Your ultimate guide to the new ISA rules

As the new ISA – or "NISA" – rules come into force, we explain what has changed and how you can benefit.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Shopping for the best rate can help your savings build over time.

Top tips for protecting yourself online

One in six adults has fallen victim to a cyber-attack, according to new research from Experian.

BLOG: Top tips for would-be entrepreneurs

As Global Entrepreneurship Week draws to a close James Benamor teaches Your Money how to get a business off th...

Stock tips from top fund manager: IP Group

James Henderson, manager of the Lowland Investment Company and Henderson Opportunities Trust, selects IP Group...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Questions on health insurance?

Visit or call 01202 544255

Money Tips of the Week