What is black box car insurance?
A black box is a telematics device which records how you drive, including acceleration, deceleration and smoothness. It can also show where and how often you drive, and the amount of time you typically spend on the road.
This wealth of information is a gold mine for car insurance brands as it lets them calculate risk levels much more accurately. As such, it can be good for you too, letting safer drivers pay lower premiums to match their personal driving habits. Telematic car insurance is all about getting a personal driving record for insurers to set your premiums by, rather than being lumped into a group price because of your age, gender, location or other factors.
The black box plugs into your car and automatically records data. The insurance company then reviews this data and uses it to adjust your premiums. Depending on the provider, this may involve giving you a score for every trip, assigning an adjustable overall score or sending information to a phone app or via SMS.
How does telematics work in car insurance?
Rather than looking at any one specific journey, the black box looks at the combined effect of many trips to work out what kind of driver you are on the whole. Currently, the only black box car insurance available in Australia is with comprehensive car insurance.
The information gathered by the black box will be used to assign you a driver safety score, which indicates how safe you are, how competently you drive and what kind of risks you may pose to the insurance company. This driving score will usually replace any no claims and safe driver bonuses or penalties levied by the insurer.
How can black box car insurance save you money?
A good DriveScore, or driver safety score, based on telematic information recorded by the black box, will lower your premiums and while a bad score may increase them.
- Black box car insurance replaces the no claims bonuses offered by most insurers. It can take up to six years to get the top level of no claims bonus, but if you are a good driver then black box insurance can help you achieve the equivalent within a single year.
- If you are in a high risk category, such as a P-plater or under 25 driver, then the black box can prove that you are not actually a high risk provided you consistently drive well. You will still be charged higher age or experience-related premiums, and additional excesses, but these will be partially offset by a good black box driver score.
- Because your no claims bonus has been replaced by your driver safety score you are able to make claims without worrying about a large premium hike. Your premiums will still increase upon making claims, but your driver safety score will remain largely unaffected.
- Analysis has shown that young black box drivers are 20% less likely to be involved in a car crash and that their accidents are less severe, costing an average of 30% less, when compared to young drivers with standard car insurance. This is thought to be partly because naturally safe drivers are more likely to opt for black box insurance, but also partly because black boxes help people drive more safely. Either way, being in that group is good for your wallet.
- If you are driving in a way that will increase your premiums, you will be notified so that you have the chance to change your habits.
- If you want to change insurers, some of them may recognise a good DriveScore and offer reduced premiums or higher no claims bonuses.
- The black box is for everyone who drives that car. If there are multiple drivers on the policy, and all of them are in high-risk categories then this would typically result in a significant price increase. However, if they are all safe drivers as evidenced by black box data, then you may be able to get significantly lower premiums than you would otherwise.
- You can access the telematic data and take action yourself. For example, you can check what kind of driver someone else on your policy is. If they tend to be unsafe it’s possible that they’re single-handedly hiking up your premiums and you could save money by cutting them from the policy and not letting them drive the car.
The amount of money you can save with a black box device depends entirely on your driving score. A good score can get you a sizable discount while a bad score might raise premiums.
However, regardless of your score, you are still susceptible to the usual penalties such as for being under the age of 25, or having made claims in the past. The black box score does not replace these; it simply provides a new way to save money in order to partially offset them. You should also note that black box car insurance in Australia is currently only available with comprehensive car insurance policies which are naturally more expensive than other options, and therefore might not be suitable for older or less valuable vehicles, and that there is an additional fee for renting the device itself.
What else does the black box do?
In addition to tracking how smoothly you drive, the black box also records some other important information. This includes:
- Location. Your insurer may use the black box data to confirm that your car is kept overnight where you say it is. This helps personalise your premiums further and confirm that the information you have provided is accurate.
- Distance driven per year. This makes a big difference to the lifespan of a car and the chances of needing to make a claim, but can be difficult to prove. The use of a black box lets your insurer understand how far you drive in a year and whether this is more or less than most other people, and adjust your premiums accordingly.
- GPS data. The black box also includes a GPS tracker which can be used to help police recover the vehicle if it’s stolen, and provide further information about driving habits.
Black box insurance exclusions
The same exclusions apply to black box car insurance as apply to most typical car insurance policies. The insurer will generally not pay out for:
- Damage incurred in the course of or resulting from illegal activities
- Damage that occurred while the driver was under the influence of alcohol or drugs other than those taken as prescribed
- Damage sustained when the vehicle was driven by someone not listed as a driver on the policy
- Damage that is in any way related to acts of war, or biological, radioactive or chemical contamination
- Damage incurred while the vehicle was being used in a race or trial, or on a racetrack
- Loss resulting from the car being left unattended and unlocked in a public place
- Loss of value resulting from depreciation or wear and tear
- Repairs conducted by an unauthorised mechanic, or damage resulting from shoddy repairs unless they were done by someone authorised by the insurer
- Damage caused by pets or other domestic animals owned by you, or which you are legally responsible for
In addition to these, insurers will also typically refuse to pay out if there is evidence of you knowingly being dishonest in your dealings with them. Black boxes make this a lot easier to spot, and insurers will often have clear proof of this if it occurs.
What black box car insurance policies are available in Australia?
Black box telematics are new to Australia and the only telematic car insurance currently available is Insurance Box comprehensive car insurance, underwritten by QBE. This policy involves:
- Reviewing the Insurance Box PDS and deciding that it is suitable for you
- Signing up
- Receiving an “Insurance Box” telematic device from the company in the mail
- Installing it under your car’s dashboard by following the instructions provided
- Driving as normal
- Regularly reviewing your driver safety “scorecard” to look for ways to drive more safely and reduce your premiums
- Once the data has “settled” or become consistent over time, your driver safety score is locked in, which determines your future premiums, and you can send the box back to the insurer.
Once your driving stops improving or becomes consistent, your premiums will be locked in. As such, step six is very important for reducing future costs.
The black box will draw a small amount of power while the car is running, but enters sleep mode when it is turned off. It will not interfere with any onboard electronics, other systems or the vehicle’s functioning in any way.
Pros and cons of black box car insurance in Australia
- Can be used to quickly achieve the equivalent of a high no claims bonus
- Will actively result in lower premiums for good drivers
- GPS functionality assists recovery if your vehicle is stolen
- Helps you become a safer driver
- Provides thorough information and evidence in the event of a dispute
- It is currently only available with comprehensive car insurance policies
- You will be required to pay an additional one-off fee in order to rent the black box
- You will need to actively review your driving behaviour to get the best value rather than simply installing and then forgetting about it
- You may have concerns regarding data collection and privacy issues