Could that black box end up costing you more? More and more people are switching to telematics insurance as a way of getting cheap car insurance. However, the costs of having that black box installed into your vehicle might be higher than you anticipated. We’re taking a look at how black box insurance might not be the cost saver that it promises to be.
What is Black Box Insurance Anyway?
Before we get into details, you might first be wondering what on earth a black box is. A black box is a device that’s installed in your car that records certain elements of your driving. Depending on the kind of black box you get things such as your speed, how often you brake, whether or not you swerve or change direction frequently might be measured and recorded. Alongside that, your GPS location will also be recorded, allowing experts to match your location with your speed, for example, to see if you’re breaking speed limits.
And just what does this have to do with insurance? Well, black box or telematics insurance is a relatively new product that some car insurance companies are using to promote lower premiums. How? Car insurance premiums are based on statistics. If you’re a certain age, for example, you tend to get charged a certain premium, since most people of that age drive in a certain way and therefore pose a higher or lower risk (find out more about what effects the cost of car insurance quotes here). But with telematics insurance your premiums are determined by how YOU drive, rather than having premiums based on how people of your average demographic drive.
But That Sounds Like a Money Saver…
You might already be thinking that black box insurance sounds like a money saver, and for some people it is. Premiums get lower the better driver you are. As long as you’re a good driver, you’ll probably find that you save at least a few Rands off your monthly premium payments. But this isn’t always the case. In fact, there are three reasons why black box insurance might actually end up costing you more than you’re already paying.
A Black Box Depends on Your Driving Skills
The first of these reasons is a fairly obvious one: you’ll only save money with black box insurance if you’re a better than average driver. Since traditional car insurance premiums are based on the average driver you’ll need to be better than the average driver in order to save money. It’s that simple. Now, we’re not calling you a bad driver, but you have to be able to realistically judge your own skills. You have to be a better driver, and a more law abiding driver, than 50% of people in your demographic (meaning people around the same age, in the same location, driving the same kind of car, with the same length of driving experience). If you’re not, well, your black box car insurance premiums will be higher than your traditional car insurance premiums.
And Then There’s the Black Box Itself…
Another consideration here needs to be the technology itself. In most cases, with most car insurance companies, you do not have to pay for the black box. The insurance company carries the cost. This is not always true, but for the most part you’re not going to make an initial investment. But there are other considerations.
Firstly there’s installation. Again, in many cases the insurance company will pay the actual black box installation costs. But should your car need to be modified in some way to have the black box fitted then those costs are going to come out of your pocket. As a general rule, the older your car, the more difficult (and possibly costly) installation is going to be.
Plus, you need to think about resale value too. If, like many people, you plan on selling your car or trading it in at some point, is having a black box going to affect its value? Frankly, we don’t yet have an answer to that question, simply because black box technology hasn’t been around for long enough to get a clear idea. But it is something that you should keep in mind.
And Your Black Box Policy Might Work Against You…
Another reason that black box insurance might be more expensive is that the policy itself might actually work against you. How? Well, that really depends on the policy wording, and you’ll need to read it very, very carefully.
There has been a documented case, investigated by the Ombudsman for Short Term Insurance, where an unnamed insurance company refused to pay out on a claim due to data from the driver’s black box. In this particular case the driver had been speeding before the accident, but at the actual time of the accident had been within the speed limit. But due to the wording of his policy, the driver’s claim was invalid.
The policy in question said that the driver’s insurance could be cancelled due to bad driver behaviour (his speeding, although he wasn’t speeding at the time of the accident), and that black box data could be used to support or deny a claim made on the policy. Some, but NOT all car insurance companies do this, so if you’re looking to save money you’re going to need to read that policy carefully. Know that in SOME cases any kind of bad driving behaviour (such as speeding) can cause your policy to become invalid, no matter when that behaviour happens (and that could be minutes or even hours BEFORE an accident).
Can I Still Save Money with Black Box Insurance?
All of this isn’t to say that black box insurance is certainly going to cost you more. However, you need to be sure of a few things before you sign on the dotted line. If you want that black box and the savings that it promises, there are three things to think about:
You must know that you’re a good driver, and by good we mean better than average;
You must know that installation is going to be relatively easy in the kind of car you have;
You must read your policy carefully and know what the limitations and restrictions are.
And as well as all of this, of course, you’re going to need to drive safely and keep to the rules of the road, since any bad behaviour is going to be recorded.
Is Black Box Insurance for Me?
For some people black box insurance is a great way to save money. If you’re looking for cheap car insurance, you’re a great driver, you get a good policy, and you drive a relatively recent model of car, then yes, maybe black box insurance is a good idea. However, it’s not for everyone. Only you can be the judge of whether or not the black box is going to work for you. But one thing’s for sure: there are downsides to that black box, and you need to take them into account before signing up for a telematics insurance policy.
Main Subject: Black Box
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