Telematics uncovered

To give you the techie explanation, telematics is the transmission of data over long distances using a device such as a mobile phone or fitted ‘black box’ with a SIM card to relay this information to a computer for assessment and analysis.

A growing number of insurance brokers such as Only Young Drivers and major insurers are looking to use this technology and the information it provides to develop insurance products priced on how someone drives their car rather than the more traditional factors.

Using some motion sensors in your Smartphone or Black Box along with their GPS (Global Positioning System) locational services, the devices will collect and send information about the way you are driving your car. They measure things like acceleration, braking, speed, and the number, length, and time of the journeys that you make.

This means that the telematics insurance provider will know whether you drive in rush hour, at high speed and whether you brake or accelerate harshly and frequently. This may all sound a bit sinister, but telematics insurance can lead to cheaper premiums – especially for safer young drivers.

Let's say you take out a standard car insurance policy. The insurer will look at a number of risk factors before it sets your premium, including your age, driving experience, occupation and make and model of the car. But it does not take into account your driving habits. For example, it will not know that you avoid motorways, generally stick to the speed limit, and don’t drive late at night very often.

But the time of day that you drive - and your driving style - can have a big impact on your driving record. For example, accidents for young drivers are much more likely late at night, in rush hour, or when someone drives too quickly, for obvious reasons. If your insurer can track your time on the road and how you drive it can adjust your premiums to more accurately reflect the risk of an accident happening.

There are also other advantages to telematics car insurance other than premiums being based on driving behaviours alongside the more traditional factors. Fans of telematics argue that it actually encourages safer driving because the driver knows and understands they are being monitored and takes more care, which can’t be a bad thing. The technology can also assist in managing a claim after an accident by providing the driving data leading up to the crash.