Telematics Insurance: Advantages and Disadvantages of Telematics insurance

When I first learnt about black-box auto insurance I was rather excited as it could help me cut down on my car premium. But as I learnt more about what all is recorded by telematics box, I got bit wary and wondered if it benefits to have telematics box fitted in my car.

Today I would be sharing my views on pros and cons on Telematics – Black Box Insurance.

Advantages of Telematics Insurance

  1. It is good for young drivers. As we discussed in factors affecting car insurance rates, young drivers usually get an unfair deal because they lack driving history and are considered high risk group by insurers. Young drivers who are responsible can benefit from having a box fitted in car which demonstrates to the insurer that they are responsible behind the wheel.
  2. If you drive during off-peak hours you will get rewarded.
  3. Black-Box helps find stolen cars as well as it reports to the insurer in case of accident. In case of accidents, black box can also help determine who was responsible for it as its recording can be yours in legal proceedings.
  4. If you drive less and hardly take your car out for a ride you stand to gain under this policy. Many of us have a car which we take out only at special occasions, in that scenario a usage based insurance will be beneficial.
  5. Having a device monitoring your driving activity all the time can be scary, but it does helps in cultivating good driving practice.

Disadvantages of Telematics Insurance

  1. It is not good for long distance drivers. In case you have to ply long distances often for work and other activities, telematics recording will not be in your favour and car insurance might get expensive for you as compared to normal car policy.
  2. Drivers who are already considered safe e.g. middle aged individuals with good driving history won’t stand to gain much under black box insurance policy.
  3. Breach of privacy is an issue which still needs to be addressed properly. Having extra pair of eyes monitoring you is not something everyone is comfortable with and can be stressful for some.
  4. Typically, the payback period for telematics device ranges from 6 months to a year.
Personally I have gained from getting black-box device fitted in my van and buying a telematics policy as compared to my traditional auto policy, do let me know your views and experiences in comment section.

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