Insurers are increasingly turning to driver monitoring technology (black boxes), better known as telematics, to identify safe drivers and reward them with reduced car insurance prices

How is a black box installed?

You either install the device yourself or have it professionally fitted – depending on what your insurance provider offers

• Self-installed black box – This is now the most common way to set up telematics. You’ll be sent a small device to plug into your car’s diagnostics port or cigarette lighter. You may need to pair it with a mobile phone app
• Mechanic-installed black box – your insurance provider will arrange for an engineer to install this device. It will be placed out of sight, typically behind the dashboard, under the bonnet or in the boot, so it doesn’t distract you while you’re driving
• Smartphone app –   some insurance providers offer a telematics app that uses your smartphone’s GPS to gather data about your driving. You won’t need to have a device installed

How does the ‘black box’ work

Your car is fitted with a small device – commonly known as a ‘black box’ – that records speed patterns and distance travelled as well as the type of roads you’re using and when

The technology also monitors braking and cornering to build a picture of your driving style. Insurers then use this data to calculate the cost of your insurance and adjust your premium accordingly, with each aspect having an effect on the price that you pay

For example, not only will you be charged for the total number of miles you cover, but you will also incur higher policy prices for driving during peak hours when there is an increased statistical likelihood of an accident occurring

The insurer will normally charge you an up-front fee, which includes the cost of the device and its installation, and then quote you a price for your annual premium, which can decrease or increase month on month, depending upon your driving performance

What’s inside the box?

There are 4 main elements to the black box fitted in your car.

1. GPS system, which tells the insurer where and when you drive, and the type of road you’re on
2. Motion sensor (or accelerometer), which provides information about impacts on the car – this could be from heavy braking or an accident
3. SIM card, which sends the information to the insurer’s database
4. Computer software, which controls how the information is analysed and transmitted

What information does the box record?

Elements of your driving that’ll be tracked include:

• How fast you drive
• How quickly you accelerate
• How sharply you brake
• How fast you take corners
• How many miles you drive
• The time of day you drive
• Where you drive

You’ll usually be able to access your own data, but it won’t be shared with anyone else except your insurer

Why take out black box insurance?

Though it isn’t for everyone, there are benefits that come with black box insurance:

It can reduce the cost for high-risk drivers: As insurance is based on risk, insurance for new or ‘riskier’ drivers can be expensive. Insurance for 17-year-olds, or for older drivers with convictions is often much higher than the average for example. Black box insurance gives these drivers a way to prove to insurers that they can navigate the roads safely. This can often allow them to claim cheaper insurance as a result

It can help track your car if it’s stolen: Black boxes relay location data to your insurance provider which could help track your car down if its stolen. This is only the case if you have a permanent, fixed black box though. App-based policies that need you to have your phone in the car with you won’t be able to help trace your car

It can prove who’s at fault in a crash, as things like your speed, braking force and cornering are monitored. This can be helpful if you’re involved in a collision that wasn’t your fault

It can help you improve your driving, as many policies give you tips on what to work on to improve your driving score. If you’re a new driver, this can be a great way to improve your skills, and gain more of a discount at your next black box insurance renewal

In the UK, telematics largely aimed at younger drivers who are often hit with the highest car insurance premiums. But it’s not just young drivers that could benefit, as any careful driver who doesn’t cover many miles and drives predominantly during off-peak hours could see a reduction in the price of their premium

All companies involved are keen to stress that you will not be penalised for bad driving habits

The best known providers of telematics insurance include gocompare.com, insurethebox.com, confused.com and Admiral