Fitting a black-box tracker to your car may well reduce your insurance premium. This is especially beneficial to young drivers who often have insurance quotes in the multiple thousands of pounds - figures that are often much higher than the actual value of the vehicle being covered - a fact that has led some young drivers to either give false information on their insurance applications, or to simply not bother insuring the car at all.
What Is A Black-Box Tracker?
Credit: http://en.wikipedia.org/wiki/File:Aioi_patent.JPGA black-box tracker is a telematics (the integrated use of telecommunications and informatics) device that is installed inside a car to provide information about how the driver is performing. The concept of using telematics in vehicle insurance was patented both in the United States and in Europe; the US method patented by Progressive Auto Insurance using a cellular or mobile phone and the Global Positioning System (GPS) to track the vehicle and the European system patented by Salvador Minguijon Perez instead uses the car's own engine control computer to track data such as the car's speed, the time of day, distance driven and bgraking force.
How Does It Work?
When a black-box is fitted to a car the device communicates directly with the insurance provider - or firm acting on the company's behalf - providing information on the drivers' behaviour. This can include GPS tracking as well as the speed of the vehicle, handling, time of day, braking etc. This information is then used to adjust the driver's premium.
Will It Reduce The Premium?
ICredit: SXC.HUt may. Should the driver perform well and thus show that they are a safe driver and not a "boy racer" their insurance premium will typically reduce. This can lead to a substantial drop in the price of the premium. Of course, should the black-box show that the driver is performing poorly, the price will increase.
Insurance companies have plenty of data showing when a car is more likely to be involved in an accident; for example, 40% of fatal and serious accidents happen between 11 PM and 5 AM, and these often involve young drivers. Driving during these hours will therefore increase the cost of insurance - although if such driving is infrequent, the overall yearly insurance premium may still decrease. Rush hour driving is also more expensive and more accidents happen during these periods. Someone who uses public transport for their work commute and only drives on evenings and weekends will likely see a substantial drop in their premium.
How Popular Are They?
Currently, black-box systems are a minority item. Only a handful of insurance companies actually support the addition of a black-box to vehicles (at writing, only four companies in the UK support them); with those companies that don't support them, the addition of one will make no difference to the premium.
Having said that, the market is growing. Three years ago only 12,000 policies were issued that used a black box recorder. Now, the figure is closer to 180,000. This is still a small percentage of the estimated 20 million car insurance policies, but the growth is rapid. Should it continue at the same rate, the number could easily start going into the multiple hundreds of thousands of policies if not millions.
What Are The Advantages?
As mentioned earlier, it could reduce your insurance premium, possibly significantly. According to specialist telematics company Insurethebox they have noted a 30 per cent drop in accidents for drivers who have had a black-box fitted in the year after. Having a good track record of driving and getting your premiums lower more quickly will likely have long term benefits too, even if the black-box is removed after a few years. A car insurance premium will be based on the actual driving skills, patterns and behaviour of the driver, not on general statistics. A young driver of above average skills will therefore be more likely to pay lower premiums under black-box insurance policies.
A side benefit of having such a device fitted is due to the fact that the car's location is also tracked. The benefit this gives is that if the car is stolen, the car can then be tracked and recovered more easily - as long as the thieves don't remove the black-box of course - which can also lead to a drop in the insurance premium.
What Are The Disadvantages?
Credit: http://en.wikipedia.org/wiki/File:Surveillance_quevaal.jpgThe black-boxes can easily cost several hundred pounds to buy and install, and as mentioned not many insurance companies as yet support telematics. One disadvantage is that the car is always being monitored - which is a problem if you dislike constant Big Brother monitoring. Such constant monitoring may put pressure on the driver, making them concentrate on such things as speed rather than what the car is doing. It does no good driving at the speed limit if the driver isn't watching the road. And, of course, should you score poorly on your monitored driving and show yourself to be a higher risk, the insurance premium will go up, not down.
There is also the possibility that once you have had a black-box tracker fitted it will be much harder to get insurance without one. This is unlikely at the present due to the as mentioned earlier fact that not many companies actually support the use of a telematics device, allowing plenty of choice when renewing, but if the number of companies using them starts to grow this possibility may also grow.
It looks like black-box trackers are going to continue growing in popularity. The potential benefits for many of the safer young drivers by substantially reducing their premiums is often worth the added hassle of continual monitoring. If they do grow in popularity, it may get to the point where young drivers find it very difficult if not impossible to get cover unless they agree to have a black-box fitted. Should this start to happen, it is likely that compulsory installation of black-boxes will start to spread to the rest of the car insurance marker.