Telematics is a term that most drivers have not heard of, but it is something that is going to become more and more prevalent in motoring in the near future. It is going to be particularly important for young drivers as it will allow them to lower their insurance costs. Telematics is the practice of putting a black box in a car which measures how well a person is driving.
It is something that young people have been doing for a while but it is thought that older drivers will soon be taking advantage of the system. The insurance comparison website GoCompare has recently completed a study which showed that over half of people who are aged over 55 have considered installing a black box in their vehicles.
The use of telematics is on the up and in the first three months of the year an insurance company reported that over 10 percent of all the policies they sold took advantage of the technology. Interestingly, while the product was initially thought to be mostly useful for young people on their insurance policies, the biggest take-up has been with people who are aged between 25 and 55. This group accounts for around 75 percent of all sales of telematics equipment.
Using a black box in your car can mean that if you drive safely, you will benefit from lower insurance premiums. The AA has recently released a study which showed the cost of insurance is consistently increasing and this situation is likely to get significantly worse in the near future, especially for women.
In the past, insurance companies were allowed to discriminate on the basis of gender because women had fewer car accidents. However, anti-discrimination law is about to make this impossible, so car insurance for women is about to go up significantly.
The insurance director for the AA is Simon Douglas and he has commented, “We believe that telematics is a great way to encourage drivers to be safer on the roads. It puts the power of controlling the insurance premium in the hands of the driver and it doesn’t discriminate on the basis of gender.”
The concept behind the device is rather simple, although there are many different types available. Essentially, a device is fitted to your car which gives information about your driving habits to your insurer. The information looks at how much you are driving your car and how you drive it.
Until recently, most insurers that offered telematics policies were specialists, but mainstream insurers are starting to get in on the technology. Both Co-op and AA insurance have recently announced they will be launching products that take advantage of telematics.
The technology is complicated and policies that revolve around it are not always easy to understand. Generally, the idea is that those who hold the policy are charged for every mile that they travel. Motorists are able to purchase a basic amount and then if they go over this they start paying for every mile.
If they are regarded as driving safely, then they will be given reward miles so they can travel further each year. Some other policies take into account when you do your driving, for example, if you are driving at night time it creates a more expensive policy.
The insurance that is being offered by Co-operative rewards drivers who drive well, and punishes those who do not. They give you an initial quote, and after 90 days they assess your driving and either give you some money back, or charge you more depending on how safe you are. Telematics can be a bit of a risk, as sometimes the insurance can be higher than a standard insurance premium.