Safe Driver Insurance

For many young and novice drivers, obtaining car insurance can be a costly experience. Higher premiums reflect the greater likelihood that young and inexperienced drivers will have a car accident in their first year on the road. According to the Association of British Insurers, one in three road death victims in 2012 were under 25 despite this group accounting for just one in eight UK licence holders. An 18 year old, for example, is over three times more likely to crash their vehicle than a 48-year old driver. In order to help high risk drivers keep their car insurance premiums lower, insurance providers have introduced safe driver's insurance policies. This type of car insurance encourages safe driving and calculates premiums that accurately reflect an individual driver's behaviour on the road.

About Safe Driver Insurance

Safe driver insurance uses telematics to determine premiums for individual drivers. Telematics incorporates telecommunications and informatics to send information about a driver's behaviour to an insurer. Data is then used to determine premiums for car insurance policies. This concept was first developed in the United States by Progressive Auto Insurance and was invented by Salvador Minguijon Perez, who developed a patent for using a vehicle's engine control computer to determine how a driver operates their vehicle.

Benefits of Safe Driver Insurance

Opting for safe driver insurance helps at risk drivers maintain lower premiums. This type of insurance rewards safe and responsible driving habits. Although safe driver insurance is available for all drivers, it is often attractive for drivers who pay higher premiums and who are considered higher risk drivers, such as young, novice and male drivers. According to the British Insurers Brokers' Association, the use of black box technology in car insurance policies has increased five-fold between 2010 and 2012. In 2012, Co-operative Insurance estimated that safe driver insurance led to a 20 percent reduction in motor vehicle crashes involving young drivers since 2010. The insurer also determined that younger drivers are also less likely to have a crash than drivers with standard insurance and less likely to have a serious accident.

How Safe Driver Insurance Works

In order to enrol in a safe driver insurance policy, drivers must agree to install a black box in their vehicle. These black boxes observe a driver's actions on the road. The driver's behaviour is tracked and transmitted to the insurance provider before the premium is calculated. The individual applying for safe driver insurance may be monitored for a set number of hours or a certain number of miles, depending on the insurer. An in-car black box is typically the size of a smartphone and is installed in the vehicle's dashboard. Alternatively, insurance providers may offer an app that can be downloaded onto a driver's smartphone. The app uses the phone's built-in GPS to track driving behaviour. Regardless of whether a black box or app is used, the technology incorporates a telematics system that records speed, acceleration, cornering and braking. Apps and black boxes also monitor when and for how long the car is driven.

How Car Insurance Premiums Are Calculated

Using behaviour-based data, insurance companies are able to calculate customised insurance rates. Safe driver insurance rewards safe driving with lower premiums based on how, how often and when the car is used. If data from the black box demonstrates poor driving behaviour, premiums could be higher. Various aspects of driving behaviour are considered in order to calculate a score that will influence the insurance premium. This includes speed, acceleration, braking, and the time of day the vehicle is driven. For example, drivers who operate their vehicles mostly during the day for shorter distances will score well as good drivers and receive lower premiums. Similarly, a driver who brakes often and suddenly or accelerates quickly could receive higher premiums than a driver who brakes and accelerates gradually. A black box is also able to track poor driving behaviours such as fast cornering and stunt driving, which may result in higher premiums if detected.

Read the PACTS paper on getting young drivers back on the road in safety or click here to find Pass Plus, Advanced and Motorway driving lessons.