Will black box insurance become compulsory?Current affairsFinance
Black box insurance is growing in popularity as a way for motorists to get covered, but will it soon be compulsory?
What is black box insurance?
A black box is an electronic recording device that can be use to record data during a journey. Black boxes have long been used in aviation, where they are fitted to vehicles such as airplanes and helicopters. The devices often prove vital during the investigation of certain incidents during a flight, such as an otherwise unexplained accident. Black box insurance is introducing the use of black boxes in cars. The system is relatively new but is growing in popularity – here, the devices serve a very similar role as when used in aviation but also build up individual driver profiles.
How it works
The first stage is to contact a car insurance company, who will then fit your car with the device. About the same size as a smartphone, the device records speeds, distances travelled and the times at which travel is made. The box also provides information on location and assesses your braking and cornering habits.
The information that is collected on a black box is then compiled by insurance companies, who assess the data to provide bespoke insurance policies. The system, also commonly referred to as telematics or pay-as-you-go car insurance, can also be very useful when it comes to investigating an insurance claim.
Black box insurance could particularly benefit traditionally high-risk groups, such as young drivers: instead of being tarred with the same brush, a driver has the opportunity to prove that they are in fact a safe driver. This helps to cut down on discriminative insurance policies as safe driving is then rewarded, regardless of the driver.
With customers treated as individuals, this gives them an incentive to drive safely. It helps insurance companies too, who are able to weed out the unsafe drivers. Because the black boxes are traceable, is also likely that car theft crime will decrease.
Despite the many advantages associated with the use of black box insurance, some argue that the devices could be used by governments to effectively spy on people. A law forcing the use of the system is therefore likely to cause controversy, so black boxes will probably stay optional. However, law forcing the use of black boxes is probably not necessary anyway, as the system is proving so effective that it may soon become the norm for new cars to include black boxes. If no black box is fitted then drivers may be asked to have one installed. Those drivers who opt out may be seen as having something to hide and so will likely have to face high insurance premiums.