Can telematics make your car insurance cheaper?
28th Sep 2012 | 11:00
Black boxes in cars promise to reward safe drivers with cheaper insurance
Ever feel as though you're paying over the odds for your car insurance because of your age, job title, or because everyone else drives like an idiot while you're a model driver?
Telematics could help lower your premium. This in-car tech uses GPS and a mobile data connection to monitor your driving style – speeds at which you drive, time of day you make your journeys, and so on – and then feeds this data back to your insurance company. Your insurer can then use this information to adjust your premium according to the way you drive.
If you don't drive at peak times, or you're a safe driver in what an insurance company perceives to be a high risk occupation, a telematics-based policy could save you some money.
When you take out a telematics-based policy, your insurance company will fit a 'black box' to your car and then you're good to go. Another advantage of the system is that because the box tracks your location, it'll help the police locate your car if it gets stolen.
There are a number of companies offering telematics policies in the UK, including AA Drivesafe, Autosafe, Bell from Admiral, Coverbox and Insure the Box. Some policies are based on the number of miles you drive, with bonus miles awarded for safe driving, while others reduce your premium if you drive safely, and at safer times of the day. Most also offer an online dashboard where you can monitor your performance.
But can telematics make your car insurance cheaper? After all, the last thing you want to do is sign up for a telematics-based policy only to discover that your spirited dash up the motorway has tripled your premium.
To give you a taste of the technology Confused.com recently launched Motormate, a free app for Android and iPhone. Once downloaded, simply run the app each time you drive your car and you'll be given a rating out of five for each journey you make.
TechRadar lived with Motormate for a couple of weeks to try to gauge how a telematics box might affect our insurance policy.
Once installed, the app is simple to use – make sure GPS is switched on, put the phone in a cradle on your dash or windscreen and launch the app. Then press the big green button before you start your engine and press the red button to stop the app once your journey has ended.
At the end of each journey, you'll be given a score out of five. The scoring system certainly motivated us to try to improve the rating, but without detailed feedback after each journey it's hard to know where you need to improve.
It's also worth noting that the scores that are returned after each journey can change the following day, presumably once the data has been uploaded to Confused.com and analysed, so we were relieved to see that one journey that was scored with a rather shocking two stars did creep up to a slightly more respectable three stars the next time we checked.
Motormate also promises that after 250 miles you'll get a more detailed report, so with the lack of per-journey feedback beyond the five-star system, we were hoping for more guidance on where we could improve to be revealed in this report.
Unfortunately, the final report didn't provide that information but it did at least give us the final score of 52 – which, apparently, is above average, meaning that we might benefit from a telematics-based insurance policy.
A RoSPA advanced driver typically has a score of 80+, the app pointed out, lest we feel too smug about our slightly above average status.
Whether or not you go on to switch to a telematics policy, Confused.com will send you a free in-car cradle and charger once you've done 20 miles (until 31 October) and give you £25 cash back after driving 250 miles (also until 31 October).
With those rewards on offer, the data collected from the app must be of value to Confused.com, but the company assured us that it would not be sharing the data with any third parties and that it is trialling the app to help customers understand telematics products better.
Jo Garci, head of telematics at Confused.com, told TechRadar that the app records the following driving data: GPS co-ordinates and signal strength and time; the trip's date and time; your acceleration; your deceleration; your G-rating, which effectively measures your cornering; and your phone model, software version and application version "for support purposes".
The future of telematics
We asked Garci how telematics boxes might develop in the future and what additional info they might use in calculating an insurance premium, such as how long someone has been driving without a break, or whether their stereo is being played at a high volume.
"From a technology perspective this is all possible as with many other features - are customers using their phone when driving? how many passengers are in the car?" Garci replied. "However, personally I think customers will have a huge concern on the 'Big Brother' factor and the consequence of their actions.
"Customers currently struggle with the potential annual increase in motor insurance premiums and if there was also a risk of this increasing because of their driver behaviour mid-term this is likely to make them even more reluctant to give permissions to insurers to monitor these elements."
Per-mile road tax
Aside from calculating insurance rates, telematics could also be used to change how road tax is applied to a model where drivers pay per mile.
"As we know, the Government is looking to make changes to the road tax model currently due to falling revenue levels using the CO2 emissions method," explains Garci. "The introduction of E-Call may also help if they wanted to go down this path." E-Call is a European initiative that should be in place by 2015. The technology behind E-Call enables a crashed vehicle to automatically alert the nearest emergency centre with its location, thus lowering response times.
But this, too, is unlikely to be unpopular, warns Garci. "Ultimately, whatever method the Government chooses is likely to amount to an increase in tax that consumers need to pay which just adds further pressure on motorists."
We asked whether telematics boxes might one day become compulsory, and used to automatically debit fines from the accounts of speeding motorists, but again, Garci warned "I personally think this would be a very unpopular proposal for the Government to introduce and is likely to have quite a public backlash."
So it's unlikely that telematics boxes will become compulsory but perhaps they don't need to be to increase adoption.
Instead, imagine a situation where anyone who chooses not to have a telematics box fitted is automatically put in the highest risk insurance group and pays top rate. Fit the box, and your premium comes down. Doesn't a telematics policy sound more attractive now?