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The Insurance Cost of Technology

  • 16th April 2015
  • Panda Insurance
  • News

With all the available technology to use in your car it is fair to say that a 21st century driving experience is worlds apart from what it would have been only two decades ago. But what affect does this have on the cost of your insurance policy?

You would certainly think that with satellite navigation systems, smart phones and black boxes we all have the capacity to be safer and more identifiable, but are we also more easily distracted and therefore causing more accidents, resulting in having to pay more on our insurance premiums?

Satellite Navigation Systems

The technology used for satellite navigation systems was first available in a commercial format in 2001 when companies such as Tom-Tom and Garmin were able to use previous work on GPS receivers and package them into a more manageable size. The idea was simple, give road users an interactive mapping experience to ensure they are able to get to their destination and it has expanded ever since.

Car manufactures soon picked up that sat navs were becoming a huge part of a commuters experience and introduced built in versions to many of their models. This in turn made the vehicles more expensive and therefore would cost more money to replace if stolen – this has led to a further premium being added to cars with built in sat navs.

It’s not just cars with built in satellite navigation systems that find an increase in the premium – a similar rise can be seen for those with portable ones as well. Leaving a portable sat nav on display in your car can present the perfect opportunity for thieves to break in and make off with your device.

A recent survey of around 2.3 million modified vehicles suggested that those with satellite navigation systems had a 13% increase on their policy than those without them.

Smart Phones

Over the past few years smart phones have been getting, well, smarter. They can do more than ever before as technology advances and the industry introduces new features, but has this affected our ability to drive? Using a hand held mobile device whilst driving is against the law and people who are caught will receive a fine as well as points on their license.

fine if caught

Around 1 in 4 car pile ups are blamed on people being distracted by their mobile phone although texting only accounts for around 5% of these crashes. If you need to use your mobile in the car then you must use a hands free kit, but be warned if the police think you are distracted and driving with undue care and attention then you can still get stopped and prosecuted!

smart phones
So what affect does this have on your insurance policy? Well if you are convicted of any motoring offence then you can expect to pay a higher premium than you would have done previously. A recent article in the Daily Mail suggested that you could see a rise of around 49% compared to those without a conviction.

Black Boxes

Similar to the ones found in aeroplanes, you can have a small black box installed in your car which is able to collect all manner of detail about your driving. A black box can record the speed you are travelling at, the time of day, which roads you are on and your braking and cornering ability. They are designed to collect every little detail about your driving experience in the hope of building a bespoke insurance quote.

Black box installation
The technology has been around since the early 90s when American car manufacturers were adding them to their cars in order to work out how the vehicles fared in crashes. It has only been since the mid-2000s that insurance companies have picked up on the idea as a way to help anyone who would typically pay a higher insurance premium i.e. newly qualified drivers or those with convictions.

FMOS-Insurance tracker
The black box can tell an insurance company how a driver is currently performing which means that those who record ‘safer’ data (e.g. not exceeding the speed limit and avoiding night time driving) could see a lower insurance premium than taking out a standard policy. The policy is often amended on a monthly basis so depending on the data that is taken you could see a rise or fall in your premium.

Black box saving

There are some drawbacks to the technology though – firstly there can often be an installing charge to get the box added to your vehicle and although this is unlikely to outweigh the savings it should still be a consideration. Secondly those who cover a lot of miles or have to drive at night time (where it is often considered less safe) may find no savings at all.

It may seem a little bit unsettling to have your every move tracked but there are some advantages to this, for example if you are involved in an accident then the black box could hold the data to prove who was at fault. Similarly if your car is stolen then the GPS tracking system will be able to help you locate it. Weighing up whether it is right for you or not can be tricky, but it could be one of the few technologies to help lower your insurance premium.