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Telematics explained

Telematics explained

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What is telematics insurance?

It sounds relatively confusing, but telematics insurance simply works by monitoring the way you drive. There are a few different types that operate via an app you activate while driving, or a device that’s fitted to your car.

In turn, the data these devices or apps gather is used to calculate what you end up paying for your insurance. So if you’re a safe driver, or you drive less than the average motorist, a telematics policy could work out cheaper for you than a standard car insurance policy.

How does telematics insurance work?

This depends on the type of policy you have. In either case, a black box is fitted to your car, or an app begins to collect data as you drive. This data is then used to calculate what you pay for your insurance. There are three types of telematics policies available:

Black box insurance

Black box policies work by rewarding safe driving. The data your app or device collects is used to generate a driver score. The safer you drive, the higher your score.

And the higher your score, the less you’re likely to pay for your cover at renewal. This score is typically based on aspects of your driving, like speeding, braking and mileage.

Pay as you go insurance

Also referred to as 'pay-per-mile' car insurance, these policies track how many miles you drive. You'll pay a flat rate for your policy and an additional fee for each mile you drive on top of that.

Your insurer generally doesn't track other data such as how fast you drive. If you only drive infrequently, these policies could help you save you money.

Green car insurance

Some green policies track how you drive and reward you on how economically you navigate the road. Things like the speed you travel, the gears you use, and how efficiently you brake are all taken into account.

You’re then given a green score. The higher the score, the more you could save at renewal! Not all green policies work like this, and some may not track your driving at all.

Telematics insurance pros and cons

Pros

They can be cheaper than standard policies: Occasional and low mileage drivers could benefit from using a pay-as-you-go policy. Younger drivers or those with driving convictions could find a black box insurance policy a useful way to bring costs down. And eco-minded drivers could be rewarded for efficient driving with a green policy.
They can help locate a stolen car: Having a telematics device fitted in your car can track your car if it's stolen. It could be particularly useful for students who often live in higher-crime areas. Unfortunately, this doesn’t work with policies that require you to use an app.
They can help prove fault in a crash: A telematics device or app can monitor speed, braking and more - this can help provide useful data that could be used to prove who was at fault if you're involved in a collision.
They can improve driving standards: In an effort to increase your driving score, a black box policy will typically give you tips to drive safely. If you’re a bit sharp on the brakes, for example, your insurer will let you know, and you can improve accordingly.

Cons

You may have to stay with the same insurer to save: Some policies work by rewarding you for driving safely at renewal. This means you'll have to remain with the same insurer for at least two years to enjoy these benefits. Your driving score cannot be transferred to another insurer.
You're not guaranteed to save: Black box policies rely on you building up a good driving score, failing to do so could mean you won’t see any discount. Worse yet, you could end up paying more at renewal for poor driving. A pay-as-you -go policy could also work against you if you drive more than anticipated - you'll be billed for every mile you travel.
You could have a mileage restriction: Some black box policies only cover you for a set number of miles. If you exceed the mileage, your policy may be void and you won’t be able to make a claim. You may have the option of increasing your mileage limit, but you'll have to pay extra to do so.
You could end up paying for black box removal: Some policies require you to have a device permanently fitted to your car. You may have free installation but could be charged for removal.

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Who are telematics policies good for?

Telematics insurance was traditionally associated with new or younger drivers. But these policies are now widely available for any driver facing high car insurance costs, including:

Newer drivers

Younger drivers and those new to driving typically pay more for car insurance due to their inexperience. Our data shows that drivers who have held their licence for 5 years or less pay £1,688 for cover⁽²⁾, compared to the overall average of £861*. Black box policies can help prove young and new drivers are safe, responsible road users, despite their inexperience.

Low mileage drivers

It can be cost effective for low mileage drivers to consider a pay as you go policy. This type of policy is based on paying for the number of miles you drive. Infrequent drivers could pay less than they would for a standard policy with a similar level of cover. You're billed at a pre-agreed rate for each mile, so it can work out cheaper if you don't exceed your annual limit.

Convicted drivers

If you have a speeding, drink driving, or dangerous driving conviction you're likely to pay more for car insurance. Black box policies can help prove if you're a responsible driver, so you could bring down costs with telematics insurance. It can also help drivers improve their driving habits.

Older drivers

Our data shows that insurance costs tend to slightly rise again after 70. One reason is that insurers consider senior drivers more likely to have an accident compared to drivers in their 50s and 60s. For instance, car insurance for over 70s costs £541* on average, compared to £528* for over 60s car insurance. To help avoid price increases, older drivers can consider telematics insurance.

_{^{*Confused.com price index for Q3 2024.}}^{_{(2)Confused.com data, Q2 2024.}}

How are telematics devices installed?

There are three types of telematics policies. You'll typically have a black box fitted to your car, or activate an app on your phone whenever you drive. If you pick a policy that tracks your driving via a physical black box, you may have to have this fitted to your car.

In this case, an engineer will be sent out to professionally fit your device, but you may have to wait a few weeks to get it fitted. You'll normally be able to drive while you wait for installation, but you won’t build up any driving score during this time.

Other policies may just send you a plug-in black box in the post. This would connect to your car via its diagnostics port (usually USB), and can be self-installed in a few minutes.

If an engineer fits your device, they'll be required to remove it when your policy ends. You may have to pay for this, but some insurers offer the service for free.

Check your policy documents to see how this applies to you.

How do I get a telematics quote?

When you compare quotes with us, we’ll show you regular car insurance quotes alongside telematics ones. This way, you can see whether a telematics policy really could save you money.

Black box policies will be marked up with a specific black box logo.

The same goes for pay-as-you-go policies.

All other policies are standard car insurance policies.

To get a quote, you’ll need:

Your personal details - including your name, age, where you live and what your occupation is
Details of your car - like the make, model and any modifications made to it.

We’ll do the rest to find you the best cover, at the right price.

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^{***Based on data provided by Consumer Intelligence Ltd, www.consumerintelligence.com (October '24). 51% of Confused.com car insurance customers could save £452.34}

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What our expert says

"Telematics policies can be a great way to save on your insurance, and they aren’t just for young drivers. Those who find themselves driving less could save with a pay-as-you-go policy, and older drivers who are seeing their prices spike again might be able to save with black box insurance."

Louise Thomas Motor Insurance Expert

Need more help?

Who gets to see my driving data?

Only your insurer can access your driving data, it won't be shared with third parties. The only exception to this is if you’re part of a criminal investigation. In this situation, your data can be shared with the police if they request it. But otherwise, your data is private. You’ll normally be able to access your own data. Most policies come with an app or online account that shows you how far or how well you’re driving. Some even send you tips based on your driving habits.

What happens if I speed with telematics box insurance?

Continually breaking speed limits, especially by significant amounts, is likely to seriously impact your driving score. And it could even lead to your insurer cancelling the policy.

Insurers don’t usuaully use telematics data to pass on evidence of motoring offences to the police, but there may still be repercussions from speeding. If you want to lower the cost of your insurance by being considered a good driver, it’s best to stick to the speed limit.

Can you drive abroad with telematics?

Yes, just like a standard policy, you could have 90 days European cover included - but as ever, check your documents first. If you're driving further afield or for longer, you may need to look into additional cover.

It's likely you may only have third-party cover included as standard for trips abroad, even if you have a fully comp policy in the UK. So bear in mind this only covers you for damage you cause to others, their property, or their vehicles.

Can someone else drive my car if I have telematics insurance?

Yes, as long as they're a named driver on the telematics policy. If someone else does drive the car, then that person is using your miles and their driving counts count towards (or against) your good driving score.

This is really no different from a standard insurance policy.