When it comes to competition in business, the car insurance industry is one of the most competitive industries on the planet. Insurers are constantly trying to balance the needs and requirements of consumers, regulators and governments while trying to make a profit.
The industry has always been about information and data, even before this era of big data. Auto insurance companies have used data to analyze markets and consumers in order to determine how much risk a particular policy will expose them too. They then use this data to set rates.
Now this use of data to determine premium amounts has evolved even further. Read on to learn all about the rise of black box car insurance and what it means for you.
What is Black Box Car Insurance?
Black box car insurance, also known as telematics, is a method of determining your premium amount using data about your driving habits that is gathered electronically. Typically, a small device is attached to your car to gather the data. This is the “black box”. Usually an approved mechanic installs the black box on your vehicle.
However, the black box is only one way to gather data. Some companies use a plug-in device that performs the same functions. These plug in to a charging port or cigarette lighter. Also, some companies are offering a smartphone app that tracks the same information.
Using the data gathered, insurers can better evaluate the risk they face in insuring you and, therefore, provide a more accurate premium rate. This is a much improved system compared to the old way of using general information such as how old you are or how old your car is. With telematics, it’s your driving behavior that matters.
What Information Will Be Collected?
Your insurer can collect all types of useful information about your driving habits, including:
- Where You Drive: Insurers will be able to understand if you are driving on the highway or busy roads, where accidents are more likely. Or, if you mostly drive in a suburban or rural setting.
- When You Drive: If most of your driving is done at rush hour, you are more likely to get in an accident. Driving at night versus daytime also presents a higher risk.
- How You Drive: How fast and how much you drive are both data sets that your insurer will look at, as well as how much you brake and how you take corners.
While insurers are mostly insisting that drivers will not be penalized in the form of higher premiums for bad habits, this may not be true in the future.
Depending on your driving habits, it may save you money to go with a black box policy. The best way to find the best black box policy for you is to compare quotes with InsuranceWins. Just give us a few details and you can start right away finding a black box policy that could save you money.