Telematics motor insurance policies, often known as ‘pay how you drive’ or ‘black box’ insurance, take into account how the vehicle is used when setting the premium. This allows an insurer to offer premiums that are more tailored to the users of a vehicle than is possible with a traditional motor insurance policy.
Telematics policies primarily use GPS technology to measure how a vehicle is being driven – insurers then use this information to make decisions about risk based on driving performance. This information is considered together with other traditional risk factors, such as a driver's age and where they live, to set premiums. ‘Safe’ drivers will usually benefit from lower premiums than ‘less safe’ drivers.
Insurers will assess driving performance in different ways, but most will consider things such as the number of miles driven, the types of roads used, and speed and braking patterns.
