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Telematics Insurance

It is essentially a type of mini computer in your car which tells the insurer all about your movements. It is a small device, the size of a cigarette packet and often a small plain black box – hence the common name for such policies being black box insurance. If you are familiar with sat navs, it is essentially the same thing but without the screen. Just like a sat nav, it sends a signal up onto a satellite but instead of bouncing back to plot your position on a map it simply stores the information on the Insurance company’s central database.

Just like the sat nav technology it can plot your position, at any given time, amazingly accurately to five square metres or so. Since the signals are being beamed continuously, the computer can track not just your position but your speed too. This means it can actually calculate your road position, acceleration and braking as well and plot that on a road map, comparing it to the speed restrictions in place.

One of the problems with motor insurance is that drivers tend to get lumped together in groups and labelled. This is fine if it is a ‘positive’ label such as middle-aged and experienced but annoying and, more to the point, expensive if you are a ‘good’ driver but bundled into a group which has a poor reputation. For example young drivers (18-21); night club doormen and comedians (who often drive late at night) or previously convicted drivers.

By choosing to have a telematics insurance policy you are immediately suggesting that you are a responsible driver because you are happy for your driving habits to be monitored. This is why black box insurance quotations tend to attract a discount against comparable policies. Direct Line recently stated that discounts of up to 40% can be earned.

Polices vary in how they work but all work on a similar principle in that they reward responsible driving habits. If you know you are a sensible or experienced driver why should you worry if a computer is tracking your movements? Likewise if you are a law abiding citizen do you really care if the computer tracks you to the staff or station car park, or the local supermarket? It may be different if you are a drug dealer or sleazy politician but most people are not.

One thing that also happens is that drivers ensure they drive more correctly because they know someone is watching them. It is a bit like drivers slowing down when they see speed cameras. If the driver is aware that their actions are being monitored they tend to act a little more judiciously which is a benefit to everyone.

An unrelated benefit is that the black box acts like a tracker device and can provide the insurance company and / or police the exact position of your vehicle should it be stolen.

The main objection to such polices are that this is Big Brother personified. This means that ‘The Man’ can see where you are (well at least where your car is) at any given moment. Your privacy is invaded. Consumer action groups rightly protest about privacy concerns, particularly about who can access such personal data but they cannot hold back the proverbial approaching storm.

The other major problem is that should you breach the various driving parameters imposed by the insurer you will be penalised. This may be a simple as breaching a mileage limitation or it could be because the computer has calculated that you are regularly speeding. It is also fair to say the various telematics insurance providers have a different methodology for fines or penalties which can be very confusing when one is trying to compare policies.