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Black Box Insurance

Black Box Insurance

What Is Black Box Car Insurance?

Black train unit insurance, otherwise called telematics insurance, is a type of collision protection that utilizes technology to track and record a policyholder's driving behavior. The goal is to base the driver's insurance premiums on the amount they drive and how safe (or risky) they are in the driver's seat.

How Black Box Technology Works

Telematics depends on a combination of telecommunications technology, including remote gadgets like cellphones and GPS.

A "black box" is either truly introduced in the vehicle or downloaded as a smartphone app. It connects to a GPS gadget that measures and records vehicle speed, location, distance voyaged, driving frequency, and season of day the vehicle is moving. Other driving performance factors that can be estimated incorporate the way in which hard the driver applies the brakes, how quickly the vehicle accelerates, and how pointedly the driver might take a corner.

All that data is changed over into a score, which the insurance company can use to set a customized premium rate for the driver. The better the score, the lower the premium ought to be.

How Insurers Use Black Box Technology

Auto insurers utilize black box technology for a number of purposes.

For instance, a few insurers offer pay-as-you-drive (PAYD) or utilization based insurance (UBI) policies. With a conventional collision protection policy, drivers normally pay a still up in the air in part by the number of miles they hope to drive during a certain period, like six months. Conversely, with a PAYD policy, the driver just pays for the miles they really drive. The black box gadget or app is the means by which the insurer monitors this.

Different insurers utilize the technology principally to evaluate how much risk a particular driver presents. They might offer refunds to safe drivers, give a bonus mileage allowance to them, or recharge the policyholder's policy at a lower rate.

Those incentives appear to be leading to a developing acceptance of black box technology with respect to drivers. A 2021 J.D. Power survey found that just 16% of U.S. vehicle insurance customers have pursued telematics, and 34% will try one, particularly since a portion of the insurers offer 30% to 40% discounts for customers that do.

Likewise, in 2020, a survey by Arity, a telematics company, found that "around half of drivers were OK with having their insurance priced based on the number of miles they drive, where they drive, and what season of day they drive, as well as occupied driving and speeding." That figure was up in excess of 12 percentage points from a comparative survey in 2019.

Yet, however the technology can mean lower rates for certain policyholders, a driver who has a long drive, works late-night shifts, or reliably goes over the speed limit might wind up paying higher premiums with a black box policy than with a traditional policy.

One more reason to worry is data privacy — in particular that insurers will share personally identifiable data accumulated from black box gadgets with outsiders like banks or law enforcement agencies. In the Nationwide survey, 62% of drivers said they had privacy concerns.


  • Black train unit insurance utilizes technology to track and record a policyholder's driving behavior.
  • The insurance company can then tailor premiums based on how much and how safely the policyholder drives.
  • Safe drivers might see a reduction in their collision protection premiums, however others might wind up paying more than they would with a conventional policy.