Telematics twist for younger drivers may pay off

CAR INSURANCE NEWS ROUNDUP: WEEK ENDED 20 MAR 2013:

Finding heap car insurance for young drivers in the current economy is like trying to fit a camel through the head of a needle right now: good luck to you.

However, even though it seems like an absolutely impossible task there are some ways younger motorists are looking to cut costs, and the most popular method right now is turning out to be ‘black box’ telematics motor car insurance policies. You simply fit a telematics device in your vehicle – a little satnav-type piece of technology that keeps track of whether or not you drive like an idiot – and you’re rewarded with lowered car insurance rates for driving responsibly.

There are a few problems with this scheme though, as many insurers require you to pay out of pocket for the telematics device. This can be rather expensive – as much as £100 in some instances – though many insurers have begun to provide free smartphone apps that use your mobile phone’s GPS and accelerometer functions to keep tabs on your motoring behaviour – and if you turn out to be a lousy driver you’re going to end up actually experiencing higher rates rather than getting a discount on what you’re paying right now.

However, some insurers are adapting the old telematics routine by not offering discounts on your renewal but by allowing you to earn periodic cashback payments instead. Car insurer Carrot says that they’ll review your motoring performance on a quarterly basis and offer you some bonus cashback on a prepaid MasterCard offered for free; the more responsibly you drive, the more cash you’ll get back every quarter.

This is innovative because it prevents your insurance from going up if you happen to have a quarter where you just end up doing poorly behind the wheel. Instead, you just might not get back any of that cash you were looking forward to, but you won’t actually be out any extra cash come renewal time, and with money being so tight right now it could spell the difference between a younger driver being able to afford to keep their car insured or having to take it permanently off the road!

Personally I’m all for it, though many of people have misgivings about letting an insurer have an up-close and personal look at where you’re driving, for how long, and your behaviour while you’re behind the wheel.  At the same time, insurance is so damned expensive right now that the minor loss of privacy can be well-worth the trade off; besides it’s not like your insurer is listening in on your conversations or making judgments as to what kind of music you’re listening to, right?

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