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Pay How You Drive – better by miles or not?

If you have heard of 'black box' insurance – also known as 'pay how you drive' but are not to clear as to how it may help you, here are a few points to bear in mind when considering this option for your motor insurance.

This type of insurance takes into account how the vehicle is used when setting the premium the driver pays. This allows an insurer to offer premiums that are more tailored to the users of a vehicle than is possible with a traditional motor insurance policy.

'Pay how you drive' policies use GPS technology to measure how a vehicle is being driven and this information is then used by the insurers to judge the driving performance. This is then considered together with other traditional risk factors, such as the drivers' age and occupation to set the premiums. Drivers deemed 'safe' will usually benefit from lower premiums than 'less safe' drivers. Insurers will assess driving performance in different ways, but most will consider things such as the number of miles driven, the types of roads used and speed and braking patterns. The technology used may take the form of a computer built into the car, or it may be a small device (commonly referred to as a 'black box') which is fitted by the insurer – or it may be a Smartphone app.

As each insurer will assess driving behaviour in different ways, how you drive will have a different effect on your premium, depending on which policy you choose. It is vital therefore to read the policy terms and conditions before buying insurance to make sure you understand how your driving will be taken into account. In some cases, premiums will be adjusted at set points during the policy to take into account the driving behaviour data. In other cases, premiums will stay the same throughout the life of the policy but low risk driving behaviour will result in non-monetary benefits. For example, these insurance policies include set annual limits on mileage and charge extra for any miles driving above that limit, safe driving could be rewarded with a free increase in the annual limit.

There are other benefits to be had too, such as:

> Feedback on your driving with suggestions and incentives to improve your driving
> Tracking services to help locate your vehicle if it is stolen
> Emergency services notifications in the event of an accident
> Improved claims handling – 'pay how you drive' data can provide independent, objective evidence in the case of an accident.

However, you need to give careful consideration to your lifestyle pattern: if you frequently drive late at night or on unsafe roads – or if you constantly drive badly, then your insurer may consider you a high risk driver. Insurers react differently to this, some drivers may face a premium increase, a one-off charge or, if the driving is deemed particularly dangerous – cancellation of the policy. So make sure you read the small print and make sure you fully understand how high-risk driving behaviour will be taken into account before deciding if this is the right route for you to go down.

Give consideration also to who drives your vehicle because the 'pay how you drive' policies will assess how the vehicle is driven overall, rather than just by the main driver. In some ways, this is similar to a traditional motor insurance where adding extra drivers can change the price of your insurance, so this does provide food for through when adding on those extra drivers!

When you are looking at 'pay how you drive' insurance, take a close look at the driving restrictions which may be imposed. Some policies apply a fixed charge if the vehicle is driven outside of set hours, but other policies have no such restrictions. Where the 'pay how you drive' policy uses a black box, there may be a charge from the insurers to install and remove the device – and there may be a clause stating you will have pay a charge to recover the cost of the device should you cancel the policy early. This is why it is sensible to take professional advice, one call to Westhill Insurance Services and you will receive sensible and easy to understand advice and guidance.

Insurers will usually employ the services of specialist companies to help them deliver their 'pay how you drive' policies. These companies will generally have access to your 'pay how you drive' data. This may be shared with third parties, so you have the opportunity to access additional services such as breakdown cover, or special offers. However, your insurers should gain your permission before sharing this information. Insurers will NOT share your data with the police or any other authorities unless they are forced to do so by a court order, or you have expressly given your permission.

If you decide to cancel the policy, you need to make sure the relevant steps are taken to stop data either being transmitted or received once the cancellation takes effect. These can include:

> If you have a black box installed in the vehicle, you should be given the option to have the device removed. There may be a charge for this. If you don't want to pay to have the black box removed, your insurer will either stop the black box from transmitting data or if this is not possible, it will make sure that the data it transmits cannot be used.
> If the policy used Smartphone technology, data will stop being collected once the app is deleted.
> If the vehicle has the technology built-in, it may not be possible to remove it. In this case, your insurer will make sure that the data your vehicle transmits is no longer received by them.

So, whilst the 'pay how you drive' policies can be an excellent choice for many people, there are draw-backs (as indeed there are to most things!) and taking professional advice will mean you have the opportunity to fully understand the policy and to fully assess the pros and cons. At Westhill Insurance Services we have a friendly and dedicated team who will be delighted to explain how 'pay how you drive' policies work and to help you reach a conclusion as to whether this is the right type of policy for you. One quick call and you will have all the information you need to set you on the road to happy motoring, and as an independent insurance broker we will shop around on your behalf to make sure you get the best option to put you miles ahead of the game.

Contact Westhill Insurance Services, today.

Posted on 21st June, 2013