The hidden truths about 'black box' car insurance

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Asian car driver woman smiling showing new car keys and car. Mixed-race Asian and Caucasian girl.


An investigation by Mail Money has found that drivers who opt for 'black box' insurance could be setting themselves up for fines, hidden costs and even cancelled policies.

Black box insurance, which monitors the safety of an individual's driving, thus supposedly lowering insurance premiums over time, can actually result in hidden fees and even fines for those breaking the speed limit.

Mail Money found that in most circumstances and insurance provider would warn a driver if he or she has been found to regularly break the speed limit but in some cases fines of up to £100 have been issued.

Black box insurance users have also found that the lengthy tomes of small print that come with each policy have proved misleading or difficult to understand. Drivers with iKube, for example, have been stung with charges of £100 a night for driving outside of its curfew hours of 11pm to 5am.

A number of black box insurance providers also charge the customer should they sell their car or switch providers.

Mike Powell, insurance analyst at research company Defaqto, told Mail Money: "Black box insurance carries so many fees and charges, they need to be made much, much clearer.

"It's very easy for drivers to be taken in by the technology, along with the promised drop in premiums, but they can end up paying out a lot more than they thought."

The technology was only introduced over the last five years but it has proved a hit among young and newly qualified drivers, lured by the promise of cheaper insurance quotes for safer driving.

The black box technology sees a GPS system fitted to the underside of the car, which transmits information about the style and quality of driving (speed, acceleration, braking) to the insurer. The customer is then rewarded with cheaper insurance premiums if he or she displays a good and safe standard of driving.

But a number of young and inexperienced drivers have found they are not being rewarded, as buried in the terms and conditions for Admiral's policies (provided by subsidiary Bell), it states: "We compare your driving with that of other customers and calculate a score based on how you drive - and how your driving compares to other customers.

"At renewal, we will use this score and performance group to determine if your renewal price should be discounted or increased."

So, with a huge proportion of black box insured motorists displaying impeccable driving manners, it could mean that nobody receives a discount come renewal time.

Graeme Trudgill, of the British Insurance Brokers' Association, told Mail Money: "Black box is still relatively new so many insurers are still exploring the options.

"Some insurers are waiting to see if it is simply only those drivers predisposed to driving cautiously anyway that will use it or if it will significantly change those less cautious drivers' behaviour too."