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Any money saved on car insurance from having a telematics “black box” installed can be eroded by little-known fees.
Telematics boxes can save motorists money by monitoring how well they drive and varying premiums accordingly. Young drivers who use the technology save about £150 a year on average, according to MoneySuperMarket, a price comparison service.
The problem is that these boxes are expensive to provide, install and remove. The box and installation are normally free, as insurers build these costs into their premiums, but in some circumstances they levy extra charges. If drivers are not careful, these fees can cancel out any money saved by having the boxes installed in the first place.
Telematics policyholders are often charged when they cancel a policy before expiry, even if the telematics box is not removed. Carrot, a broker, charges £150 for this, while insurer Admiral asks for £149.50 and the RAC for £125. Non-telematics policies can also involve cancellation fees but the charge is normally less than £50.
Some telematics firms levy upfront fees instead. Be Wiser, a broker, charges between £50 and £150 for box installation, depending on the device chosen by the driver, but does not charge for its removal. If drivers miss an appointment to have a box installed, or the engineer cannot access the engine to fit it, they pay extra: Coverbox charges £50 and WiseDriving £45, for example.
If drivers want to transfer their box to another car, they will also pay extra. Think Insurance asks £180 for this while Ingenie, a broker, wants £80.
Not all telematics policies require an engineer to fit a black box; about 10pc use smartphone apps or devices that can be installed and removed by the driver. But most of the remaining 90pc involve fees for removal of the box by an expert.
Once a policy expires, most telematics firms are happy to stop recording data from the device and leave it in the car. However, drivers may wish to have the box taken out either for privacy reasons, because a prospective buyer has requested it or because some varieties of box are a slow drain on the car battery even when the engine is off.
Admiral charges £100 for removal while Hastings Direct and Co-op Insurance ask for £90. Renewing a policy can also incur a fee. Autosaint, a broker, charges £60 for this.
If an insurer or broker believes a box has been tampered with, another fee can be levied. The RAC charges £125, while Coverbox asks for £100.
Because telematics insurers take different approaches to what they charge for, overall awareness of these costs is low. Martyn James of Resolver, a complaints service, said: “I speak to many people who are hugely surprised that they have charges for coming out of their insurance contract within the year. They certainly don’t realise there can be charges for the telematics box.”
Mr James added that fees were often hidden in the detail of insurers’ policies, rather than included in the shorter and more digestible “key facts” documents issued alongside.
A spokesman for the Association of British Insurers said: “Motor insurance is a highly competitive market and customers should always consider their needs and shop around.”
Despite the charges, telematics devices should be seen as a force for good as they encourage young motorists to improve their driving, according to Crispin Moger of Marmalade, a broker.
“One in five young drivers has an accident within six months of passing their test,” Mr Moger said. “When you introduce black box technology, it drops to one in 18.”
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