Telematics is the buzzword of the car insurance world; everyone’s talking about it. But only about 10% of motorists currently have a telematics insurance policy, so clearly not everyone is rushing to install a blackbox, or download an app. What’s the reason for the discrepancy?
Is telematics insurance really just the preserve of the young driver, or is it a product with potentially universal appeal? Who really stands to benefit from a telematics insurance policy?
1. Young drivers
There’s no getting away from the fact that many of the telematics products available today are aimed at young drivers. A traditionally high-risk group with traditionally small bank accounts, telematics provides a great way for safe-driving teens to prove to insurers that they shouldn’t be lumped in with the crowd.
Though the details of telematics insurance policies differ significantly between providers, as does the driving behaviour of the policyholders, savings of up to 40% or £1,500 aren’t unheard of.
2. Drivers with a poor claims history
Telematics insurance policies allow the insurer to see how safe – or otherwise – your driving is now. While past claims history is still likely to impact the starting premium, once the blackbox begins to transmit data back to your insurer, they can assess your current driving behaviour, and adjust your premium accordingly. This means that drivers with recent claims can start benefitting from lower premiums much sooner than they would be able to with a conventional insurance policy.
3. Drivers with motoring convictions
An unspent motoring conviction is an indicator of risky driving behaviour and, as such, insurers will often load premiums for policyholders with penalty points on their licence.
In the same way that they can help drivers with a poor claims history, telematics products can help push premiums down more quickly for policyholders with motoring convictions than conventional insurance policies can, as they allow insurers to take into account how you’re driving now, not just how you used to drive.
4. (Some) risky drivers
You may not have a motoring conviction or have made multiple claims in the past, but you may still have an increased risk of causing an accident because of the way you drive.
Clearly, conventional car insurance policies can only use historical data to price your premium. So if you’ve avoided convictions and accidents in the past, you probably won’t see your premium fall with a telematics insurance policy.
However, telematics insurance can benefit you in ways other than just price: they can make you a safer driver.
The theory behind this is twofold: one, the very fact that you’re being constantly ‘observed’ encourages you to drive more safely; and two, the almost real-time feedback that you get opens your eyes to how risky you really are, and therefore you consciously make changes to the way you drive to become safer.
So, if you’re interested in driving more safely, or cheaper car insurance premiums more generally, telematics policies are the way to go, right?
Not necessarily. There are some risks that you can’t manage down. When, where and how much you drive are factors insurers commonly use to assess risk. If you regularly drive long distances, at ‘high risk’ times and on ‘high risk’ roads, a telematics policy might prove more expensive.
But just as conventional car insurance policies differ between providers, so do telematics policies. If you’re not sure whether telematics is right for you, or you need help finding a telematics policy that suits your needs, get in touch with a broker who’ll be able to advise you.