Black box insurance offers pay-as-you-go car insurance by recording how you drive, and pricing the policy based on your usage.
The idea of this type of insurance is that you only pay for how you actually use the car.
Instead of basing your quote on your previous driving experience (or lack of it), the insurer fits a car insurance box in your vehicle which gathers different types of information on how, when and where you drive.
As with other types of car insurance there are different levels of telematics insurance cover available, but the tariffs are priced based on information sent by your black box.
How does black box insurance work?
Black box insurance usually provides an initial period of cover for a set price; this is often limited to a certain number of miles' cover (e.g. 6,000 miles).
Insurers review your driving periodically and could increase or decrease the cost mid-way through the policy year. While you should always compare black box car insurance quotes based on the initial premium you need to bear in mind that this cost could change in the future.
When you take out black box insurance your provider will fit a car insurance box in your vehicle. The box uses GPS to track a number of factors that contribute to how safely you drive:
Number of journeys made
Types of road used
Time of travel
Acceleration and braking levels
Any accidents that you are involved in
This allows your insurer to price your car insurance according to how you drive, rather than guessing your risk level using much broader categories.
Who is black box insurance suitable for?
Because GPS insurance can give detailed information on how you drive, it doesn't need to rely so much on age to indicate your risk (although these factors are still used to some degree).
This can make black box insurance for young drivers a cheaper option than standard car insurance - but only if you drive safely within your cover's limitations.
The best young driver black box insurance depends on the base level of cover, and the subsequent cover level and charges after that period.
You can use the factors listed above to decide if it is a worthwhile option for you. In general, black box insurance is most suitable for those that are happy to make fewer and shorter journeys, drive at lower speeds and predominantly during the daytime. If you're willing to be really gentle with your acceleration and braking levels this is even more the case.
Simply put, this kind of pay as you drive insurance will only prove cost effective if your driving habits match your insurer's prescribed 'safe' driving style.
Restrictions and conditions
Restrictions play an important part in black box insurance, as they help insurers limit their financial risk and in doing so offer you cheaper policies.
Typically restrictions will include - to some degree - mileage limits, increased charges for driving at night, and driving reviews every few months (depending on your insurer).
While driving safely and within insurers' restrictions can earn you 'rewards', driving that isn't considered safe will be liable for much higher charges and raised premiums in the future.
This means black box insurance can end up more expensive than standard cover if you don't use it correctly.
How to find the right policy for the right price
You'll need to be honest about how you drive in order to decide whether this type of insurance is worthwhile, because your box gives an exact representation of your usage and charges you accordingly.
Firstly, decide what level of cover you require, you need to think about how and when you're most likely to drive as well as how many miles you're likely to cover each year .Then compare the black box cover offered by each car insurance provider to find the policies that meet your requirements.
You'll not only need to consider the initial premium, but also the cost of installing and/or removing the car insurance box, and any penalties (in addition to increased mileage rates) applied if you drive during night time hours.
You should also check that you're comfortable with how often your driving will be reviewed and the possible penalties or perks that will be applied.
Remember that you shouldn't just look for cheap black box insurance policies because they may not always be the best option for your circumstances. Instead you should compare all your options before agreeing to a policy.
Once you've narrowed your options you should compare black box car insurance quotes for all policies that give you the cover you want, to get the best price possible.