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A little black box helps women cut soaring car cover

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Young female drivers, whose car insurance premiums have soared to a record high after EU gender rules were introduced in December, can keep a lid on costs with ‘black box’ technology that rewards safer driving.

Women, who previously paid less than men for motor cover, have seen their premiums rise because insurers are no longer allowed to discriminate on gender. Meanwhile, boy racers have seen their costs fall.

The average annual insurance premium for women aged 17 to 20 is at an all-time high of £2,256 – up 20.7 per cent on a year ago. The cost of the average premium for 17 to 20-year-old men fell by 21.6 per cent.

Road test: Josie Elworthy installed a tracker in her car and saved thousands

But black box technology – also known as telematics – can slash premiums for careful drivers.

The box is a tracking device fitted into the vehicle, allowing insurers to monitor driving behaviour including speed, braking and turning. The safer the driver, the lower the premium.

For waitress Josie Elworthy, 18, from Longwick, Buckinghamshire, it was the perfect solution. She passed her test in February and couldn’t wait to get out and about in her Ford Fiesta, which was sitting on the driveway.

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She says: ‘I looked at car insurance quotes and they were absolutely ridiculous, some even coming in at £4,000.’

Josie, who lives with her mother Jane, 46, found telematics on the  Co-operative Insurance website.

‘I gave it a go and it brought it down to £1,680,’ Josie says.

 

‘I have to stick to the speed limit and I can’t drive after 11 at night or before six in the morning, but I am quite happy with that as I get home from work at half past ten in the evening.

‘Without telematics I wouldn’t have been able to afford my car.’

In theory, anyone who is a careful driver can benefit from telematics, but those who stand to gain the most are youngsters between 17 and 19.

Figures show that a third of all telematics quotes are for women in this age group. They have been hardest hit by the European Union rules.

Drivers under the age of 25 save on average  12.5 per cent – £210 – on the cost of cover if they opt for a telematics policy, according to price comparison website MoneySupermarket.

There are about 20 providers, including Co-operative Insurance, the AA, and Marmalade, but other major players are likely to enter the market later this year.

The British Insurance Brokers’ Association estimates that 360,000 drivers are using telematics, but predicts that this will rise to half a million within a year.

Policies based on driving behaviour are also likely to become more common from 2015, when a new EU initiative called eCall, which aims to bring rapid assistance to motorists involved in an accident, will require all new cars to have telematics technology.

 

Amy Kilmartin, who is young driver product manager at the Co-op, says: ‘Telematics is very much in its infancy, but with some big brands entering the sector and the Government keen on exploring the solution to the number of accidents involving young drivers, with the resultant higher premiums, it will become more mainstream.’

However, the technology might be too redolent of Big Brother for some drivers. According to accountant Deloitte, the main reason motorists do not want to use the technology is because they think it too intrusive. And it could increase premiums for drivers not sticking to the criteria of careful driving.

The cost of installing a black box – at between £50 and £200 – also acts as a deterrent. Customers have to pay for this as part of their premium, meaning that any savings could be wiped out in the first year. And if they were to buy a new car they would have to pay for it to be refitted.

Phone app can track you

Only one per cent of drivers buy telematics insurance, but the launch of an app that effectively turns your phone into a black box is likely to change that.

Insurance technology specialist SSP and telematics provider Wunelli will tomorrow allow drivers to get telematics quotes from a panel of five insurers without installing a black box. Instead, the GPS function on smartphones will monitor speed, acceleration, deceleration and cornering.

By building a picture of a driver’s style and destinations, the SoteriaDrive app claims to be able to tell if users turn it on selectively, or whether someone else is driving.

Penny Searles, managing director of Wunelli, says: ‘The cost of fitting the black box is so high that insurers have only used the technology for young drivers as that’s the only time the benefit outweighs the cost. Using an app will massively cut the cost.’

The app, suitable for all iPhone and Android users, will initially be available through 1,000 high street brokers.

However, Searles says three or four of the insurers on the panel are likely to launch similar apps direct to consumers this year.

There are other apps simulating telematics technology. But Scott Kelly, head of car insurance at website Gocompare, says: ‘Up to now, they have been 50 to 60 per cent accurate, which is not good enough for insurers.’

Co-operative Insurance has a ‘try before you buy app’, which can be downloaded for free. It shows how telematics works – and whether it is likely to save drivers money. But the app will not itself cut premiums.

Aviva has an app for existing policyholders that can cut their premiums by 20 per cent.

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