My 18 year old son took out a reasonably priced car insurance which included having a black box fitted.
He was clocked speeding on three separate occasions by the box – not the police or a speed cameras – and his policy was cancelled within seven days.
Since then, he has found out that in the future, every year at renewal he will have to tick the box saying previously his insurance was cancelled leading to more expensive premiums.
How long will he be made to suffer for his mistakes and does this highlight a potential problem with black box policies?
Monitor: Telematics policies are supposed to help young drivers save on their insurance
Grace Gausden, This is Money, replies: Typically, car insurance for younger drivers is very expensive, often reaching into the thousands, due to their lack of experience on the roads, the increased likeihood of speeding, having friends in the car and a multitude of other risks.
Therefore, black box insurance, also known as telematics insurance, is one of the most popular policies for younger drivers as it can help them save a substantial amount of money on their premiums.
This involves having a small device fitted in your car that will measure how well you drive. It will monitor how fast you are going, how far you travel and how harsh or smooth your braking is.
If you can prove to your insurer you are a safe driver, it will likely lower your premiums. Some people like it for this reason, but others will simply dub it Big Brother in the car.
Unfortunately, in the case of your son, he was caught speeding three times and although it was not massively over the limit, it was enough for his insurer to decide it would no longer offer him protection which would have been in its terms and conditions.
You advised him to accept the decision and simply join another provider.
While you thought there would be an increase in price, you didn’t realise how that it would reach the mark of £2,000 annually.
This is due to your son having to admit to all further insurers that he had previously had a cancelled policy by a provider.
A cancelled policy serves as a red flag and customers may struggle to find a mainstream insurance provider to cover them.
It is also then common to end up paying a lot more for your premiums.
You haven’t said if it is the case or not but many insurers will send warnings to their customers first if they notice they have been speeding in an effort to prevent them doing so in the future.
The cost of car insurance will increase for drivers who have had their previous policy cancelled
This gives them a chance to rectify their behaviour and avoid having their policy voided.
I do understand in this circumstance that it feels like your son has been dealt a bad hand. Whilst speeding is certainly dangerous and never recommended, he is a young driver, who made mistakes.
Now he is concerned this will impact him for the rest of his life. There may also be a temptation to not tick the box in the future, but this could jeopardise a policy.
This is Money spoke to a couple major car insurers to see where they stand on telematics policies.
A spokesperson for Admiral replies: There are many benefits to getting a telematics policy, not only can they reduce premiums, they also provide useful feedback on how you are driving to help you improve.
Our black box products calculate a personalised driving score based on factors such as where, when and how you drive. The customer’s score is based on the way the vehicle is driven consistently over time, so the occasional harsh event is unlikely to have an impact on the score.
Speeding is clearly a major factor in too many road accidents, and something the black box will record. However, we believe strongly in educating drivers and helping them to improve.
We understand that some newer drivers, are going to make mistakes.
We try to identify repeated behaviours and assess and score based on those rather than a one-off mistake.
However, consistent and excessive speeding would reflect negatively in the overall driving score.
Cancelling a policy would only be used in cases where someone has consistently driven over the speed limit and ignored our alerts.
Where someone falls into our Driver Improvement Group for demonstrating poor driving overall, and fails to improve their driving performance up to an acceptable level in the monitoring period outlined in the policy terms and conditions, there is a risk of cancellation.
It’s important to say that telematics isn’t designed to catch people out. It’s a product for customers to save money by proving they are not a high risk to their insurer.
It enables insurers to calculate a premium based on how that individual drives rather than their peer group.
Speeding is not only dangerous but, for those with a telematics policy, it can also be costly
Lee Griffin, founder and chief executive of GoCompare, replies: Black box insurance policies, or telematics policies, are often a lifeline for younger drivers as they offer affordable insurance premiums for newer motorists who haven’t yet built up a no claims bonus.
If someone has had car insurance cancelled by an insurer – regardless of whether this was cancelled via telematics or traditional insurance policy – they will always have to declare this when they are shopping for insurance.
It’s not the same as a driving conviction like speeding which can be ‘spent’ after a number years, a cancellation or refusal of cover will always have to be declared at the point of getting a quote.
That said, it’s always worth checking with the insurers to provide the context behind the cancellation, as they may not class this as ‘insurance cancelled’ in a traditional sense.
If they do, there will always be specialist insurers who will quote for drivers who have previously had a policy cancelled, which is why it’s so important to always shop around at renewal.
Michael Lawrence, Distribution and Underwriting Director for Broker at LV= General Insurance, replies: A telematics policy can be a great initial product for new policy holders.
However, poor driving behaviour is a strong indicator for insurance companies, as it can highlight the risk of a potential accident.
When a policy holder has been issued with several warnings through a telematics system, this can lead to cancellation of the insurance, and insurers do take into consideration previous cancellations when offering a new policy.
Providing full details as to why the cancellation occurred can sometimes help to limit any increased premium, but is not guaranteed, and five years is approximately how long this will need to be declared.
A spokesperson for Aviva replies: Having insurance cancelled can be an upsetting event. It is a wide term, which could apply for a number of issues – some more serious than others – from moving violations (such as speeding) to fraud.
Insurers will likely want to look at the insurance application individually if the applicant has previously had insurance cancelled so that they can assess the circumstances behind the cancellation on its own merits.
Grace Gausden, This is Money, adds: It sounds like it may be worth speaking to several insurers to explain your situation and see what they can offer you.
Whilst your son may be paying more on your premiums now, hopefully the costs will decrease over time, especially if he can prove he is a safe and capable driver.
SAVE MONEY ON MOTORING
