One of the biggest running costs when it comes to your car is the amount you pay for insurance. Whether you split the cost across the year, or pay it in one lump sum, it’s up there with the big expenses you pay each year.

Car insurance premiums are based on a few factors. The type of car you drive is one. Your own driving history is another. But your premiums are also affected by the driving of other people who your insurance protects. This can leave you frustrated. Why should your premiums be higher because of the actions of other drivers? Doesn’t the insurance provided know that know you are a good driver?

The answer is: no. The insurance company will take some details from you, in particular the amount of miles you drive each year and any history of accidents or claims that you have made or had made against you in the past. It’s all based on the amount of risk they see in providing your insurance. After all, the company doesn’t want to pay out on big repair claims or legal feels.

So how can you prove to insurance companies that you are not a risk? The answer is an insurance black box.

What is an insurance black box?

When you think of a black box, you probably think of one of those indestructible containers that they find in plane crashes. The principle is pretty much the same. But instead of recording flight details, they record the day to day movement of your car. (Oh and they aren’t always black, but even the airplanes one are bright orange!)

This type of tracker is often found on things like company cars, but you can get one fitted on your vehicle to access different kinds of insurance policies. Often referred to as “black box policies”, they offer lower premiums in exchange for you following certain restrictions.

Black box insurance, also known as telematics insurance, allows you to demonstrate to insurance companies that you are a safe driver. You can do this with a device fitted to your car or by using a smartphone app, which is an increasingly popular choice.

What are the benefits?

Black box insurance can reduce your premiums as long as you are a good driver. This is especially attractive to two main groups – young drivers and drivers with a rocky history.

It’s no secret that young drivers are considered to be the biggest risk on the road. The idea of newly qualified teenagers or those in their early twenties on the road, often conjures up ideas of too many people trying to squeeze in a car or driving recklessly to show off. This is not a new idea, with ‘the youth’ often being seen as reckless on the road. Whether or not the stats back that up, insurance premiums for anyone under the age of 24 can be prohibitively high.

So if you are a young driver who is careful on the road, you might be feeling the pinch in your bank balance. A black box insurance policy could really work if you can ensure you drive carefully on the road. So no speeding, no sharp braking, and not driving more than you have stated on your insurance application.

When we have an accident, it’s not always our fault. There are lots of factors that can work against us. But when an insurer calculates our premiums, they see things in black and white. So if you have claims on your account, it might be worth signing up to a black box insurance policy for a year to try and prove you are a good driver. As long as you don’t have another accident and behave yourself, you’ll be able to reduce your premiums the following year.

Some types of black box policies adjust your premiums monthly, meaning if you are a careful driver, you can take advantage immediately.

What are the cons?

Some black box insurance policies comes with restrictions. For example, they might stop you from driving late at night when the roads are less well-lit. Or they could limit you from driving during peak times, meaning you don’t have as much freedom as you may like. The number of miles you drive each year will be reduced, as the more miles means more risk. And if you live in a city centre, or drive often on roads considered accident black spots, you will be marked down.

That lack of freedom is one of the biggest issues. When you know you are being tracked every single time you head out in the car, it can make you more cautious or slow you down on the road. And all it takes is one bad day to potentially ruin all that hard work!

If you are on a policy that updates annually, then you still have to splash out on an expensive insurance premium to cover you for that first year.

So should I get a black box insurance policy?

If you are a young driver, then an black box insurance policy can be an excellent investment. Providing you know you can follow the rules set in the policy, and won’t make any reckless mistakes, you will benefit from lower premiums.

A survey by Comparethemarket.com showed that drivers aged 17-20 could save 70% on their insurance premiums with a black box policy. Those without a black box could see premiums as high as £1,800 per year, whereas with a black box that was down to  around £1,300 per year.

If you are an older driver, you can still benefit from this type of insurance policy. In that same survey, approximately of 25% of drivers aged 25-29 found they could get a cheaper car insurance option by choosing a black box policy.

Other ways to reduce your insurance costs is to ensure you are parked somewhere safe and secure during the day and night, investing in cars with safety devices to help reduce the chance of an accident, or to choose a car that falls into one of the lower insurance groups, meaning they are not as expensive to insure.

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