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Could telematics cut the cost of van and car insurance?

A fleet of carsWould you have your every move on the road monitored if it reduced your motor insurance premium? We explain how this technology is being used, particularly by van drivers, and delve into the pros and cons of driver-monitoring.

Rising motor insurance premiums are forcing drivers to look for new ways to keep costs down.

But would you be willing to have your time and behaviour on the roads monitored if it would save you money? Well that’s what some companies are doing, in order to keep the costs of managing fleets of vans and lorries down, with a system called telematics.

What are telematics devices?

Telematics isn’t a word that rolls off the tongue for most road users but the technology is helping vehicle fleet managers – such as supermarket delivery staff   - keep fuel costs and motor insurance costs down and is something everyday drivers are beginning to catch onto.

The in-car technology, which is sometimes known as ‘tagging’, is a monitoring device which allows driver behaviour to be assessed.

Telematics devices can be fitted into cars, vans and lorries, and can monitor things like a driver‘s speed, acceleration, braking patterns and location. They’re connected to a central monitoring point, which allows managers to see where their drivers are and monitor how they’re driving.

Who’s using telematics?

At the moment, if you’re an everyday domestic van user there aren’t any insurers that will offer discounts for fitting a telematics device.

But it’s common among big businesses operating fleets of vans or lorries. Supermarket chains Asda and the Co-op use telematics devices in their delivery vans to monitor the chilled and frozen food compartments on their vehicles.

Fleet managers also use the data from a telematics system as a route planning tool, to measure the most fuel-efficient roads. Generally, though, the technology is promoted as a tool for cutting costs.

Fuel savings

Insurers Zurich offer telematics insurance for medium to large fleets of vehicles.  They say the system can reduce collisions by up to 20 per cent, operating costs by up to 10 per cent, and fuel consumption by up to 11 per cent.

Steve Stock, head of motor at Zurich Global Corporate UK, said: “Research shows that fleet telematics can save lives, reduce fuel consumption and deliver costs savings. As we continue to witness the impact of inflation on motor claims costs, Zurich Fleet Intelligence is a significant step for us in helping fleet customers reduce their claims exposure in these difficult times.”

Reducing insurance

The benefits associated with telematics can also lead to lower insurance premiums for fleets of vehicles and everyday road users.  

Insurethebox.com offers insurance for cars fitted with the device and  their target market is young drivers, although anyone can use their service.

Drivers using their system can pay for an initial driving allowance of 6,000 miles each year, which can then be topped up. Opting for low annual mileage with a telematics device allows drivers to reduce their insurance premiums, as less time on the roads equals lower risk. And although Insurethebox do not inpose a curfew on their drivers, some insurers do.

Insurethebox.com monitors customers via a service centre in Newcastle, which uses the information from the drivers to assess their behaviour and driving patterns.

A spokesman for insurethebox.com explains the benefits: “It’s not just telematics that makes the difference in cost but also the low mileage aspect. Drivers who choose to control their annual limit can make substantial savings on their insurance.

“Our statistics show that we are cheaper for young drivers 25 per cent of the time - even more for low-mileage motorists. We don't place any restrictions on how people drive and our device cannot be seen by the driver.”

Insurethebox.com also rewards good driver behaviour with extra mileage allowances, so gentle braking and avoiding bumps and crashes will reap rewards. And their call-centre can even monitor the force of any road accidents and automatically alert the emergency services if an impact exceeds 8G.

At the moment they don’t offer their services to van drivers but say it’s something they’re looking into for the future.

Big Brother

Telematics is not without its critics, however. Industry watchdog, The Association of British Drivers (ABD) has condemned certain devices, arguing that they actually increase the risk of accident and distract motorists.

ABD founder Brian Gregory said: “I’m sure the telematics companies would love to see their devices integrated into everyday driving, but the risks outweigh the benefits.

“Van fleets in particular can restrict drivers to certain speed limits. The view that we take is that anything which distracts a driver is a bad thing. If a driver is limited to 50 miles per hour then chances are they’ll sit at that without paying proper attention to the road. Driver training would see far better results than Big Brother-style surveillance.”

And when it comes to new drivers he describes the technology as ”very risky”.

“Surely new drivers need experience. This can only restrict them,” he said.

What’s your opinion? Would you be willing to drive limited hours to cut your insurance premiums? Comment below to share your views.





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Lois Avery

Lois Avery

Lois joined Confused.com in 2010 after working for Dyson and as a local newspaper reporter in Wiltshire. After a year writing financial journalism at Confused.com, Lois won the 2011 'most promising newcomer' at the BIBA journalist of the year awards.

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