Data-driven premium calculations have helped insurance companies create more ad hoc policies for drivers, improving coverage quality, accessibility, and affordability.
But, often, static indicators and rough estimations, such as driving records, distance covered per year, and demographic aspects aren’t enough to deliver policies that accurately reflect a driver’s risk.
That’s where black box insurance programs come in. Here’s what you need to know to use your car’s black box to increase road safety, boost your driving habits, and lower insurance rates.
How Does a Black Box Work? Let’s Cover the Basics
Most vehicles manufactured in or after 2013 are required to be fitted with a black box – or an Event Data Recorder (EDR).
“Black boxes” come as small devices physically installed in a car or as software that can be downloaded on a smartphone, and they use a combination of GPS trackers and telecommunication technologies to gather, store, and deliver key information about the vehicle.
Examples of the information collected by a black box include:
- Vehicle speed
- Mileage and distance driven
- Location and time of the day
- Driving frequency
- Information about driving habits (i.e.: braking, cornering, acceleration, and speeding)
This data is then elaborated to calculate a driving score, which is taken into consideration by insurers when determining a driver’s premium.
Benefits of Installing a Black Box
While black boxes have been used in the aviation industry since the 1950s, they are a relatively new introduction in the automotive sector. And yet, they are already offering unparalleled benefits, including:
- Promoting safe driving habits
- Creating more personalized insurance coverages
- Offering discounts to drivers based on their habits
- Offering insights into a driver’s habits
- Determining liability with more accuracy in an accident
Black boxes are also bound to play a vital role in how insurance will work for driverless cars.
Telematics Insurance: Using a Black Box to Lower Insurance Premiums
Black box insurance programs, or telematics insurance, are becoming increasingly popular – and for more than one reason. According to 2021 statistics, 34% of drivers are considering taking part in telematics insurance programs, and 16% more are already leveraging this option.
Additionally, a UK-based study showed that black box insurance policies are cheaper for 69-78% of young drivers, depending on their age, with savings varying from £388 and £1,137.
Here are two key ways in which telematics policies can lower your insurance premium.
Insurance Discounts
Signing up for a telematics insurance premium means that you’ll give your insurer permission to track your driving habits. Thanks to this data, insurers can more accurately understand the level of risk involved with your policy and adjust premium rates according to more realistic estimates.
That is why most drivers with telematics policies can benefit from a 5-10% enrollment discount, as well as a 20-40% reduction in insurance rates.
Pay-Per-Mile Policies
Recent estimates show that Americans drive, on average, 14,263 miles per year. However, if you are able to use your black box to prove that you only drive 10,000 miles or less each year, you might be able to tap into the benefits of pay-per-mile insurance programs.
Beyond the Black Box: Getting Cheap Car Insurance Quotes Online, e.g. in the UAE
Telematics can help you lower your insurance premium, but only if your insurance provider offers this kind of program. In any case, the best way to lower your premiums and find a policy that truly works for your driving needs is to partner with an insurance comparison expert who understands the local market.
For example, if you are looking for vehicle insurance in the UAE, you can access the most competitive car insurance quotes through local online marketplaces. These operators ensure that every provider is accredited by the local Insurance Authority, and can help you filter policies based on the availability of black box insurance programs.
Saving Money With a Black Box is All About Your Driving Habits
If you drive carefully, keep your mileage to a minimum, avoid driving during rush hour or at night, and don’t usually brake or accelerate abruptly, telematics insurance might be for you.
But don’t forget that these programs also account for bad driving habits, which can not only prevent you from accessing discounts but can also increase your rate! Consult your insurance provider to make sure that this is the right option for your needs.
