Telematics and black box insurance
Telematics and black box insurance is going to change the way Australians drive and think about insurance. Find out how telematics insurance works and how you can get a cheap telematics insurance quote.
Telematics allows for a technology-driven approach to handling car insurance which has already been embraced in other parts of the world, with drivers enjoying the benefits of paying insurance rates that are based on how well they drive – not just the categories insurers lump them into to assess their risk profiles.
What is telematics insurance?
This video by UK company Confused provides a good summary:
Our explanation reads much the same:
Telematics insurance describes a range of insurance products that are based on telematics technology as it is applied to cars and other vehicles.
In other words it is insurance based on the ability of telematics devices to send, receive and collect information about a car’s location and movement.
This information can, in turn, be used to develop very accurate risk profiles of drivers.
How insurers use this information varies.
Some insurers simply use telematics to identify high risk drivers and track stolen vehicles.
However, more progressive insurers have recognized that telematics provides a valuable opportunity to encourage safer driving.
This can be done by providing drivers with feedback on their driving and by rewarding good driving with affordable insurance rates.
What is black box insurance?
Black box insurance is just another name for insurance that relies on the installation of a telematics device in the vehicle.
When you take out black box insurance you’ll receive a telematics unit that will need to be installed in your vehicle in order to gather information about your driving habits.
Recently it has become possible to get telematics insurance without installing a black box in your car.
How does telematics insurance work?
To understand how telematics insurance works, you’ll first need to understand how insurers determine risk profiles for existing and potential clients.
How regular car insurance works
Traditional insurers have limited information on how drivers behave on the road, beyond having access to the driver’s previous claim history.
As a result they have to identify common factors among drivers they know are high risk, map these to individual drivers and then use this information to predict how likely a driver is to claim against a policy.
Typical factors they look at include:
- driver age
- driver gender
- driver experience
- how far/often the insured car is driven
- whether the car is used for business or personal use
- employment status.
A range of other factors are then used to assess the risk associated with the make and model of vehicle being insured, including theft risk, the way it is financed and the cost of replacement.
This information is then combined with the risk profile to generate an insurance rate.
How telematics/black box insurance works
Telematics puts a huge amount of important data in the hands of insurance companies.
Where traditional insurers have to use claim histories and group classifications to decide how much risk a driver poses, telematics insurers can simply record and analyse a driver’s behaviour on the road and get a highly accurate picture of how much risk they pose of making a claim.
With more detailed information about drivers at their disposal, telematics and black box insurers are able to offer insurance rates that are fairer and more accurate.
Furthermore, they are able to quickly construct accurate risk profiles for younger or more inexperienced drivers who don’t have an established claims history.
This means they can offer competitive insurance rates for under 25s who drive responsibly.
Is telematics insurance good?
There are a wide variety of telematics insurance benefits which not only make telematics car insurance fairer but also make the roads safer.
However, a fair analysis has to look at telematics and black box insurances pros and cons.
While telematics is the future of car insurance, it is also an evolving technology which the insurance industry is still adapting to.
Telematics insurance pros
Some of the benefits of telematics insurance include:
- Much fairer insurance rates – your insurance rates are based on the way you drive, and if you’re a safe driver your premiums won’t be used to subsidize the rates of risky drivers.
- Young drivers are able to get competitive insurance rates based on their behaviour on the roads, rather than being penalized by insurers who focus only on their membership of a high-risk group.
- If your driving behaviour is risky you’ll get feedback on this before you find yourself in an accident and have to make a claim.
- The ongoing feedback on driving behaviour has the potential to make drivers safer, in one study simply connecting driver premiums to car usage decreased accident rates for young drivers by 20%.
- While no claims bonuses reward good driving, they take years to redeem. With telematics insurance the benefits of good driving are apparent month to month.
- Your car can be tracked and returned in the event of theft.
- In the event of an accident in which you are not at fault, telematics data can be used to confirm your version of events.
- Some telematics and black box insurers offer car tracking applications that can be used by parents to track the location and behaviour of young drivers.
- Data gathered across large numbers of users can be used to assist research that drives public policy aimed at reducing road deaths.
Telematics insurance cons
Possible issues that come with signing up for telematics insurance include:
- Many insurers will require installation of telematics black boxes in client vehicles. In such cases there will be a cost attached to installing and renting the device.
- A telematics option is only available for comprehensive insurance cover at some insurers.
- Telematics units collect data, which raises the same privacy concerns as other devices which track user location and behaviour.
- Certain insurers have been known to require the installation of telematics units without further incentivizing good driving for their clients.
- If you have a lot of bad driving habits and aren’t prepared to change the way you drive, you’re unlikely to enjoy the financial benefits that come with telematics insurance.
Young drivers telematics car insurance
If you’re a young driver, you’ll probably have realized by now that telematics insurance is great option for covering your insurance needs without breaking the bank.
Telematics/black box insurance for young drivers is great because:
- Your age isn’t the main factor in determining your premiums.
- Your individual driving style plays a major role in calculating your premiums.
- You don’t need an established no claim bonus record to get competitive rates.
- If you drive well you won’t have to subsidize the premiums of bad drivers in your age group.
- Telematics can help you learn how to become a better driver.
- Telematics insurers like UbiCar offer young driver insurance with no black box, making telematics insurance cheaper and more accessible for under 25s.
Insurance telematics devices
Now that you know that you can get cheap car insurance with black box and telematics, you’re probably wondering what the actual technology is all about.
There are a two basic categories of telematics insurance technology on the market.
Some companies offering cheap car insurance with telematics boxes provide their clients with the relevant units along with instructions for installing these in their vehicles.
Telematics black boxes can come in a range of shapes and sizes, but modern black boxes are typically small square units that plug into a vehicle to draw a power supply.
Telematics app insurance enables drivers to get cheap car insurance without a black box.
These telematics apps do the same job as black boxes, using the phone’s built in sensors to determine the motion forces acting on the phone, as well as the phones location.
When the phone is carried by a driver, the app uses this information to track and score their driving.
Unlike black box insurance devices, telematics apps can also measure and score driver phone usage while driving.
Telematics insurance companies and quotes
Australia has been relatively slow to adopt telematics technology, and the majority of insurers do not offer cheap telematics car insurance.
So if you want to compare telematics car insurance quotes your options are limited.
At the moment only a handful of companies in Australia are offering cheap telematics car insurance:
QBE Insurance Box
QBE Insurance Box is Australia’s first black box insurance product, and requires installation of a telematics device beneath the car’s dashboard.
These devices capture data used by the insurer to adjust monthly insurance rates.
Drivers can access their scores via the QBE insurance box app and dashboard.
NOTE: This service is currently available only to existing clients of the service.
Youi SmartDrive is another app based telematics insurance product that tracks and scores your driving behaviour.
SmartDrive is available to Youi clients on the latest version of the Youi app.
Once app users unlock safe driving scores, Youi SmartDrive rewards them with a discount on their insurance rates.
UbiCar is Australia’s first telematics insurance specialist.
Unlike black box insurance companies, UbiCar does not require users to pay for, or install, a telematics unit in their vehicles in order to qualify for cheap insurance.
Instead a free smartphone app is used to collect data on user location and driving behaviour.
This data is then used to reward safe drivers with cheap car insurance rates.
What UbiCar customers say
Savings and benefits users now enjoy since switching to UbiCar*
"My massive monthly savings
are fantastic for my family"
“UbiCar has motivated me to be a better,
safer and more considerate driver."
“UbiCar doesn’t stereotype like other
*Savings are factual and based on comparison between the customer’s current Comprehensive Car Insurance policy with UbiCar as of December 2018 and their policy with their previous insurer. Premiums and savings may differ depending on individual circumstance.