If car insurance is taking a hefty bite out of your budget, there are a number of ways to potentially decrease your premiums. One of the easiest ways is simply to shop around using comparison websites, which allows you to see just how different the numbers can be between different providers.
Insurance companies use a variety of factors to assess risk, after all. Another way to lower your car insurance rates is to think about installing a telematics system or “black box.” These record your actions as a driver using GPS technology, theoretically rewarding you for good behavior with lower rates. It may seem a bit nanny-state, but does it really work?
How black box insurance works
Black box insurance is frequently recommended for younger drivers who may not have an established driving record yet. Young drivers are more likely to have an accident than older drivers, as are those who drive at night. The idea is that if a driver knows that his or her driving habits are being tracked, the driver will be less likely to take risks or drive after dark. As a result, the driver is rewarded with a lower insurance rate, usually up to a quarter less.
You can use a smartphone app to track driving statistics, or have a black box fitted into your car. This tracks information including whether or not you stick to speed limits, how you turn corners, and how frequently you slam on the brakes. This data is then sent using GPS to the insurance company.
The insurance company can also learn more about your driving habits this way, including the type of roads you’re travelling on, what time of day you tend to drive at, and the distances you travel. You can find out more about how this system works to see if it could be applicable to your insurance situation.
Is it worth the trouble?
There are certainly pros and cons to telematics or black box insurance policies, and the system will not benefit every driver. Those with a spotty driving record or young motorists tend to benefit the most from having a black box installed. This is a way for the driver to be judged on his or her current driving behaviour rather than past behaviour (or lack thereof).
Safe driving may not result in just a lower insurance premium, but also in added incentives like bonus miles depending on the insurance company. If you are a careful driver who is able to limit your driving during the evening hours, a black box could help you reduce your policy’s cost.
Yet this type of plan isn’t right for everyone. One of the first drawbacks to consider is the fact that you have to pay for the telematics box and its installation. If you drive a lot during peak hours as part of your daily commute, the savings wouldn’t offset this up-front cost.
Similarly, if you have a tendency to drive just over the speed limit or use your car at night on a frequent basis, a black box probably wouldn’t result in any notable savings. Not everyone is keen on having all of their movements tracked, either.
For these reasons, it’s worth having a serious think about whether you would fit the profile of someone who would benefit from this technology. And as with any insurance policy, if you choose a telematics policy you’ll want to shop around and compare prices carefully to get the best deal.
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